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

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

SPONSOR Feldman

ORIGINAL DATE

LAST UPDATED

02/06/07

HB

SHORT TITLE Small Employer Health Coverage Wait Period

SB 428

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

$0.1 see

narrative

Recurring SEIP fund

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department /Medical Assistance Division (HSD/MAD)

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

SUMMARY

Synopsis of Bill

Senate Bill 428 eliminates the waiting period for nonprofit employers with fewer than fifty

employees to purchase health care coverage pursuant to the Group Benefits Act.

FISCAL IMPLICATIONS

The Small Employer Insurance Program (SEIP) is self-funded by premium contributions paid by

employers and employees. Premiums are determined by age, gender, and geographic location.

Employer contribution (of at least 50%) determine employee's share of the premium. Through

SEIP, a comprehensive health insurance benefits package is offered with annual claims limit of

$100,000 per enrollee, including: primary and specialty care, inpatient and outpatient

hospitalization, pharmacy, lab, X-ray, physical, occupational, speech therapy, behavioral health

and substance abuse services.

A separate account is maintained to provide separate accounting, payment and private funding of

health care coverage for small employers enrolled in SEIP. The funds in the account are

maintained separately and ensured that the premiums charged are actuarially sound in relation to

the benefits provided.

Senate Bill 428 – Page

2

SIGNIFICANT ISSUES

SEIP was enacted during the 2005 session to allow small employers to band together to achieve

the purchasing power of larger employers in the health care marketplace. As part of the original

legislation, employer eligibility was limited to employers with less than 50 employees who had

not offered group health insurance for the prior 12 months. SEIP was part of the Insure New

Mexico! package of legislation passed to increase the number of New Mexicans with health

insurance and to encourage employer based health insurance.

PERFORMANCE IMPLICATIONS

Program development and coordination for the Small Employers Insurance Program (SEIP) is

administered through a joint powers agreement between GSD and the HSD.

The Insure New Mexico! Council, as one of its 2006 recommendations, proposed that the waiting

period be eliminated for nonprofit organizations.

ADMINISTRATIVE IMPLICATIONS

GSD/RMD reports that it will take a minimum of 90 days to amend the regulation for this

program (13.10.20 NMAC).

Five years after SEIP inception, the program will be administered

by the Health Insurance Alliance.

OTHER SUBSTANTIVE ISSUES

SEIP is one of five Insure New Mexico! initiatives that are already beginning to address the

problem of the high number of uninsured working adults in New Mexico. The program, which

began on July 1, 2006, is specifically tailored towards helping small employers and non-profits,

with 50 or fewer employees to buy into a comprehensive health insurance program comparable

to a commercial health plan, giving small employers the benefit that larger organizations have

through volume buying that can reduce the cost of individual employees’ health insurance.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Relates to HB 695, SB 676 expanding health care insurance eligibility through SEIP to private

sector employers:

•

HB 695 to health/human services contractors employing an average of less than 500

people, regardless of whether the employer has previously provided health care coverage.

•

SB 676 to employers with an average of less than 500 employees who have contracted

with the state within the previous three years.

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL

Employer eligibility for nonprofits will continue to be limited to those employers with less than

50 employees who have not offered group health insurance for the prior 12 months.

AHO/nt