Fiscal impact reports (FIRs) are prepared by the Legislative Finance Committee (LFC) for standing finance

committees of the NM Legislature. The LFC does not assume responsibility for the accuracy of these reports

if they are used for other purposes.

Current FIRs (in HTML & Adobe PDF formats) are a vailable on the NM Legislative Website (legis.state.nm.us).

Adobe PDF versions include all attachments, whereas HTML versions may not. Previously issued FIRs and

attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

F I S C A L I M P A C T R E P O R T

SPONSOR Feldman

DATE TYPED 2/3/05

HB

SHORT TITLE Study Health Insurance Discounts

SJM 10

ANALYST Rosen

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

Responses Received From

Public Regulation Commission (PRC)

Department of Health (DOH)

SUMMARY

Synopsis of Bill

Senate Joint Memorial 10 requests DOH and PRC Insurance Division conduct a study to explore

the benefits and feasibility of requiring insurance companies to offer discounted premiums for

enrollees who participate in wellness programs. The study includes projection of the amount of

potential reduction in health insurance premiums as a result of such a requirement, the effect on

the overall health and productivity of employees, the cost of claims to employers offering these

programs, and an identification of what constitutes an approved wellness program. Findings and

recommendations from the study are to be presented to the legislative health and human services

committee in October 2005.

Significant Issues

According to PRC, wellness programs may decrease the cost of health care and if insurers dis-

counted their premiums for such programs then more employers would offer them.

According to DOH, the current provisions of 59A-23E-12, Subsection A, do not prevent a group

health plan or a health insurance issuer offering group health insurance coverage from establish-

ing premium discounts or rebates, or modifying otherwise applicable co-payments or deductibles

Senate Joint Memorial 10 -- Page 2

in return for adherence to programs of health promotion and disease prevention.

DOH notes that if the health insurance premium discounts proposed in this joint memorial were

found to be beneficial and feasible then it would provide financial incentives to both individual

enrollees and their employers to engage in health promotion and wellness programs.

DOH notes this memorial would study shifting the provision of incentive from the employer to

the insurance companies, whose requirement to provide discounted premiums would financially

benefit the employer, and, in many cases, individual enrollees who pay for at least part of their

health insurance premiums.

PERFORMANCE IMPLICATIONS

DOH notes potential improvements in health outcomes and costs, which have been demonstrated

with a number of well-conducted health promotion activities, would represent the desired out-

come.

This joint memorial would support DOH’s Program Area 1: Prevention and Disease Control, Ob-

jective 3: Improve the weight of adults and youth, and Objective 6: Prevent and control chronic

disease.

Relevant DOH performance measures would include:

•

Rates of body mass index (BMI) for adults.

•

Number of New Mexican adults who engage in 30 minutes of moderate physical activity at

least 5 times a week, or in 20 minutes of vigorous physical activity at least 3 times per week.

•

Number of adults who report consuming 5 or more servings of fruit and vegetables per day.

•

Number of New Mexicans calling the tobacco cessation quit line.

ADMINISTRATIVE IMPLICATIONS

PRC indicates PRC staff are not trained to conduct studies of this nature.

DOH indicates the requirements of this study may not be feasible based on current DOH capac-

ity and expertise.

JR/yr