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

SPONSOR Komadina

ORIGINAL DATE

LAST UPDATED

01/24/07

03/05/07 HB

SHORT TITLE Health Care Provider Insurance Coverage

SB 49/a SPAC/a HHGAC

ANALYST Hanika Ortiz

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$.01 see

narrative

recurring various risk

management

funds

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Department of Health DOH)

Human Services Department (HSD)

Health Policy Commission (HPC)

Risk Management Division/General Services Department (RMD/GSD)

SUMMARY

Synopsis of HHGAC Amendment

The House Health & Government Affairs Committee amendment adds a “pharmacist" to the

definition of “health care provider" as used in the Act.

Synopsis SPAC Amendment

The Senate Public Affairs Committee amendment clarifies that the intent of the bill is to allow

health care providers to purchase only medical malpractice insurance coverage through

RMD/GSD.

Synopsis of Original Bill

Senate Bill 49 amends the Risk Management Act, Chapter 15, Article 7 NMSA 1978, by creating

a new section allowing health care providers, as defined in the bill, to purchase insurance

coverage including group health benefits, liability, workers compensation, public property and

surety bonds through RMD/GSD.

This new section of the Risk Management Act is repealed effective July 1, 2012

FISCAL IMPLICATIONS

Senate Bill 49/a SPAC/a HHGAC– Page

2

RMD/GSD reports no way of determining the extent of participation by these categories of

health care providers and individual businesses, but the potential is significant. RMD/GSD

further claims the fiscal impact of obtaining the initial coverage will be neutral because these

private entities will be apportioned their share toward the purchase of insurance, including

administrative costs to GSD and to the Department of Finance and Administration for risk

assessment and accounting expenses.

SIGNIFICANT ISSUES

The original intent of the Risk Management Act, Chapter 15, Article 7, NMSA 1978, is for RMD

to provide risk coverage for governmental entities including state agencies, local public bodies,

universities, and other political subdivisions of the state. A health care provider as defined in the

bill includes “a licensed physician, hospital, outpatient health care facility, nursing home,

intermediate care facility, post-acute health care facility, osteopathic physician, chiropractic

physician, podiatrist, nurse anesthetist, physician assistant, dentist, psychologist, doctor of

oriental medicine, certified nurse practitioner, registered lay midwife or certified nurse-

midwife".

SB 49 is unclear as to whether these particular health care providers will be segregated into a

separate pool which is actuarially sound for purposes of determining risk. RMD/GSD believes

until there is experience with this new pool, the risks are unknown and costs will be higher with

membership because of the possible inclusion of uninsured individuals and businesses, and the

additional administrative costs.

PERFORMANCE IMPLICATIONS

RMD/GSD states that adding responsibility for providing insurance to private sector entities will

distract from its primary duties to public sector clients.

ADMINISTRATIVE IMPLICATIONS

RMD/GSD further states that SB 49 could mandate the establishment of up to 10 pools to

provide coverage for 10 individual lines of coverage for health care providers, which is beyond

the capacity of existing RMD/GSD staff and resources.

TECHNICAL ISSUES

State agencies are concerned the intent of SB 49 may conflict with the anti-donation clause of the

New Mexico constitution (Article IX, Section 14) in providing free services to private entities.

OTHER SUBSTANTIVE ISSUES

There has been considerable discussion in recent years about the impact on the health care

industry of increasing insurance costs, especially for medical malpractice insurance.

ALTERNATIVES

Senate Bill 49/a SPAC/a HHGAC– Page

3

RMD/GSD suggests health care providers and private businesses form privately-administered

pools to obtain insurance coverage in the private-sector market or through other existing and

available insurance programs. HSD notes a new program, the Small Employers Insurance

Program, which is a self-funded pool with actuarially sound rates to allow groups of private

employers purchase insurance through the sponsorship of the GSD.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Private sector insurance coverage currently available as an option for health care providers.

AHO/mt