1-Page Overview

The New Mexico Health Security Plan

Rising premiums and copays, shrinking provider networks, no end in sight to drug price increases, and more and more plans with high deductibles – that’s what New Mexicans are facing today. Not only that, but the COVID-19 pandemic has shown us how little we can rely on employer-based health insurance, which can disappear when you need it most. The demand for new approaches has taken center stage.

The New Mexico Health Security Plan, which has been vetted by diverse New Mexicans for years, provides a well-thought-out solution. Three studies, the most recent in 2020, have concluded that covering all or most state residents through one plan controls rising health care costs. The latest study estimated savings of up to $2.7 billion over a five-year period with the Health Security Plan. And with Health Security, virtually all New Mexicans would have health care coverage.

The big picture:

The Health Security Plan will automatically cover most New Mexico residents. Exceptions are federal retirees, active duty and retired military, and TRICARE recipients, all of whom will continue with their federal plans. The tribes, as sovereign nations, may choose to join the Plan. Health plans covered under ERISA also have the option of joining the Plan.

The Plan shifts private insurance to a supplemental role, just as traditional Medicare does. Plan members have guaranteed, comprehensive, quality health care coverage, regardless of income level or health and employment status.

Developing the details:

While the framework of the Health Security Plan has been developed over the years – and is outlined in the 2019 Health Security Act – many details of the Plan have not yet been fleshed out.

In 2021, the legislature set aside $575,000 to pay for the first year of the Health Security planning and design process. Under the auspices of the Office of the Superintendent of Insurance, this process will focus on the operational details of the Plan – such as how providers will be paid, how budgets for hospitals will be negotiated, and the appeal rights of consumers. It will also determine public and private revenue sources to fund the Plan and will determine any waivers that the state will need to apply for.

The Health Security for New Mexicans Campaign’s focus is to ensure that this is a transparent and publicly accountable process that takes into account the input and needs of New Mexicans across the state.

The Health Security Plan:

• Guarantees choice of provider, even across state lines (no more networks)

• Guarantees an excellent benefit package that must be as comprehensive as the services offered to state employees

• Preserves the private delivery system (private physicians, hospitals, etc.)

• Provides strong protections for retirees

• Reduces overhead costs for health care providers and facilities

• Calls for reductions in workers compensation and automobile insurance premiums

• Will be run by an independent, nongovernmental commission with 15 geographically representative commissioners

Plan Summary

Health Security Plan Summary
(Based on the 2019 Health Security Act)

Universal Coverage:

• All New Mexico residents will have guaranteed health care coverage. Most residents will be automatically covered by the New Mexico Health Security Plan.
  Exceptions:

  • Federal retirees, active and retired military, and TRICARE recipients will retain their plans.

  • Employers and unions with plans covered under ERISA are allowed to join the Plan.

  • Tribes, as sovereign nations, may choose to participate in the Plan.

• Federal agreements will be sought so that Medicaid and Medicare may be included in the Plan and recipients will not lose any federal rights. Because negotiations around Medicare will be complex, Medicare recipients might not be included in the Plan initially.

Health Coverage:

• Everyone covered by the NM Health Security Plan will receive the same comprehensive benefits, regardless of age, income, employment, or health status. Coverage must be at least as comprehensive as the state employees’ health plan. Services will include doctor visits, hospital stays, prescriptions, preventive care, lab work, and specialist services.
  

• Current Medicaid long-term care coverage will continue, as well as private long-term care insurance. There is a parity requirement for behavioral health care benefits. Recipients of Medicaid behavioral health coverage will not lose any entitled benefits. The Commission that will administer the NM Health Security Plan must develop a plan to coordinate behavioral health services and to integrate long-term care services into the Plan.
  

• NM Health Security Plan members and employers may buy supplemental health coverage on the private insurance market, should they wish to do so.

Rural Access:

• For rural and underserved areas, the Commission may authorize higher reimbursements for physicians and other licensed health care providers, and may expand budgets for hospitals and clinics. The Health Resource Certification Program ensures that major capital investments (equipment, buildings, etc.) will be made where they are needed.
  

• Cost containment measures will result in savings that can be invested in needed health care services.

Public Accountability:

• An independent commission is responsible for administering the New Mexico Health Security Plan. The Commission will have the flexibility of the private sector and be publicly accountable. The 15 voting commissioners will be geographically representative of the state. A special nominating committee will provide the governor with a list of potential qualified nominees. Ten of the 15 commissioners must reflect consumer and business interests; the other 5 will represent provider and health facility interests. Commissioners must be covered under the Plan.
  

• Regional councils will be created with local input. These councils make recommendations to the Commission about specific local health care needs. They work with the Commission to develop and update provider fees and health facility operating budgets.
  

• The Commission must submit rate changes to be reviewed and approved by the superintendent of insurance.
  

• Under the Plan’s global budgeting provision, providers and health facilities negotiate fees and budgets with the Commission. If agreements cannot be reached, the Plan provides for mediation. Providers and health facilities make their own decisions about budget allocations for services and the health needs of the patient.
  

• The Commission must establish appeals and grievance procedures and consumer, provider, and health facility assistance programs. All Commission meetings will be subject to the Open Meetings Act. Its books and decisions will be subject to public input and scrutiny.

Freedom to Choose Providers:

• New Mexicans covered by the Plan have complete freedom to choose their licensed health care provider, hospital, pharmacist, or clinic. The NM Health Security Plan can contract with providers and health facilities across state lines.

Portability:

• If a New Mexican moves out of the state: These individuals can sign up for insurance in the state to which they move, either through their employer, through a state program such as Medicaid, or through private insurance carriers. Federal health benefit recipients, including Medicare beneficiaries, will continue to receive coverage, as required by federal law. Employer supplemental health benefit packages will remain in force for retirees who have them.
  

• If a New Mexican is injured or becomes ill when out of the state: The out-of-state hospital or physician will bill the Plan. The Plan will pay the negotiated rate.
  

• If a New Mexican needs medical treatment out of the state: The Commission negotiates with out-of-state physicians and hospitals. New Mexicans who live near the state line and normally utilize services offered in an adjacent state can continue to do so. There will be no extra hidden charges.
  

• Within the state: New Mexicans covered by the Plan who change jobs, move, or become unemployed still receive the same benefits and remain with the provider of their choice.

Cost Containment and Quality of Care:

• Costs are controlled through budgetary planning that takes into account technology, an aging population, and other factors. A Quality Improvement Program must be established to ensure best medical practices and patient safety.
  

• Hospitals, clinics, private-practice physicians, pharmacists, and other providers negotiate budgets and fees with the Commission. The NM Health Security Plan pays the bills. It may contract with a private company to process claims, as long as the claims are processed in New Mexico.
  

• Bulk purchasing of drugs and other medical equipment and supplies also lowers costs.
  

• Review of major capital spending for buildings and equipment will ensure that resource allocation is based on the health care needs of different communities.
  

• Administration is streamlined because almost everyone is covered by the same health care plan, with one claims form. Savings will result from the elimination of duplicative administrative costs built into the present system of multiple insurance plans and policies. Insurance company monies, formerly used for marketing, commissions, out-of-state investments, and profits, are made available for health care services.

Fair Financing:

• The NM Health Security Plan will be funded by combining existing public monies (such as funding for Medicaid and, when included in the Plan, Medicare) with employer contributions and individual premiums. If Affordable Care Act federal subsidies and tax credits are available, they will also be included. Only those covered by the Plan pay into the Plan.
  

• Employers may cover all or part of an employee’s premium. Premiums will be determined by income (with caps), not by age, gender, occupation, region, or health status. Premiums and employer contributions may be increased only with the final approval of the superintendent of insurance. Employer contributions will be based on payroll and number of employees (with caps).
  

• The Plan prohibits additional billing (“balance billing”) by providers and hospitals that treat Plan members. There are no copays for preventive care. Copays for other services may be established only after public hearings are held.
  

• The NM Health Security Plan requires that the NM superintendent of insurance lower automobile and workers’ compensation premiums, which have large health components.

• In the year before the Plan is to begin operations, the Commission will undertake a final cost analysis of the Plan.

Advantages for Businesses

How the Health Security Act Benefits Businesses

Healthy employees are important to all businesses, and, big or small, all businesses are impacted by rising health care costs. The fewer the employees, however, the harder it is to offer affordable coverage. And if one person has an expensive illness, that raises the premium for everyone in the group.

The COVID-19 pandemic has exposed the many flaws of our current health care system. Our hospitals, especially in rural areas, are in financial trouble. Physicians are frustrated and tired of dealing with so many different health plans. The number of uninsured New Mexicans is increasing. And health costs, including for drugs, continue to rise. These are systemic problems that require a systemic solution.

In a state with a small population, it makes sense to create a self-insured plan that will cover most of our residents, simplify this complex system, control rising health care costs, and provide secure, comprehensive coverage. That is what the Health Security Plan will do.

What is the Health Security Plan?

The NM Health Security Plan will automatically cover almost all New Mexico residents.

Exceptions: Federal retirees, active-duty and retired military, and TRICARE recipients will continue with their federal plans. The tribes, as sovereign nations, may choose to join the Plan. Large-employer health plans covered under ERISA have the option of joining the Plan.

The Plan will provide comprehensive health care coverage (no less than the services offered to state employees), with freedom of choice of health care provider, including across state lines (no more networks!). This approach is similar to what large companies do when they self-insure. The plan, which is not government-run, will operate like a co-op. Employers may offer supplemental policies to employees, just as Medicare did when it was first established.

How will it be paid for?

Funding sources include federal and state monies spent on health care; individual premiums, based on income (with caps); and employer contributions, based on payroll and number of employees (with caps).

Insuring most New Mexicans in one plan reduces rising health care costs.

A recent legislative-sponsored study concluded that the Health Security Plan will reduce rising health care costs, saving up to $2.7 billion in a five-year period. This is the third New Mexico study that has come to this conclusion. And, virtually all New Mexicans will have insurance.

Next step: the 2021 Health Security Planning and Design legislation.

There are lots of critical decisions to be made before this Plan can begin enrollment and pay health care providers. The bill creates a publicly accountable and transparent process that will address the many operational details. Prior to Plan implementation, the legislature and the governor must approve a cost analysis of the Plan as designed and how it will be funded in real (not projected) dollars.

A go-slow process: This careful planning and design phase is estimated to take four years. Such a major change will take time, with ample opportunity for public input.

Advantages for Businesses

• Reduces business administrative costs and time. Businesses don’t have to spend precious financial and personnel resources shopping for, administering, and monitoring health care plans.

• Reduces other insurance costs. The Plan requires reductions in premiums for other insurance policies that have health-related components, such as workers’ compensation and automobile insurance policies.

• Stabilizes health care costs. With more than 1.7 million New Mexicans in the same insurance pool, risks are shared and costs are stabilized. Savings will enable businesses to invest in jobs and expansion.

• Business participation. Business owners have input into this publicly accountable plan. Ten business and consumer interests must be represented on the geographically representative 15-person commission that is responsible for administering the Plan.

• Reduces employee absenteeism due to illness. The Plan emphasizes preventive care.

• Ability to attract and retain quality employees. Since health coverage is now included, businesses of all sizes gain a recruitment and retention advantage.

Patchwork solutions will not solve the rising health cost problem!

We are all impacted by rising drug costs, by hospital financial challenges that reduce nursing staff, by physicians who are stressed and frustrated with a complex system that forces them to make decisions based on what is covered by a particular policy rather than what is best for the patient. Increasing health care costs impact our state budget. Controlling those costs will free up funds to invest in education and job creation.

A great investment for New Mexico. The Health Security Plan offers a well-thought-out homegrown solution that is supported by over 170 organizations around the state. Creating one large health risk pool simply makes sense.

“The pooling of risk is fundamental to the concept of insurance. A health insurance risk pool is a group of individuals whose medical costs are combined to calculate premiums. Pooling risks together allows the higher costs of the less healthy to be offset by the relatively lower costs of the healthy, either in a plan overall or within a premium rating category. In general, the larger the risk pool, the more predictable and stable the premiums can be.”

— American Academy of Actuaries, July 2017

Health Security & Mental Health Care

Many New Mexicans are unable to get the care they need for mental health issues and substance abuse problems. The NM Health Security Plan (HSP) will help to relieve the suffering and disability caused by untreated mental health problems in our state.

• Coverage for all. The HSP provides complete health coverage for most New Mexicans, but it will be especially helpful to those who have no health insurance and suffer from mental health issues and substance abuse problems. People who have severe mental illness in NM are about twice as likely to be uninsured as other New Mexicans.

• More mental health care providers. The HSP will help bring psychiatrists, psychologists, and other mental health care professionals to NM. How? First, the HSP will attract them with better pay, at rates comparable to other medical providers. Second, mental health professionals want to spend their time and energy meeting with patients and giving care – not pleading with insurance company representatives or jumping through time-wasting hoops to get paid for their services. The simpler HSP approach will be a relief to these providers, and the word will spread far outside NM.

• Help for rural communities. Mental health services are especially hard to get in our rural areas. To help solve this problem, the HSP calls for higher fees for mental health practitioners who work in rural (and urban) areas that are underserved.

• Less expensive medications. Psychiatric medications are often very expensive – a major problem for those who need them. Through bulk purchasing, the HSP will lower the cost of these essential medicines.

• Strong mental health coverage. In the past, treatment for mental health and substance abuse has often not been covered by insurance, or has been covered at a lower rate. The HSP requires that coverage for mental health be equal to coverage for other medical conditions.

• Untreated mental health disorders and substance abuse issues affect all of us. Families experience tremendous strain and heartache. Workers struggle to keep their jobs and their income. Employers find it difficult to hire dependable employees. Untreated substance abuse can also lead to illegal activity, with all its harm and financial burdens.

Drug abuse tops the NM Department of Health’s list of diseases that cause death or disability in our state. Depression is #6. It’s past time to change this. Making sure that everyone has affordable access to mental and behavior health care is a giant first step. And passing the 2021 NM Health Security bill is the way to make that happen.

Advantages for Health Care Providers

NM Health Security Plan: Some Advantages for Providers

To grasp what this statewide, cooperative-style, premium-based Plan would look like, imagine the following:

• No insurance company networks, which currently greatly complicate the lives of both providers and patients

• One set of prior authorization and formulary rules and data sets for almost all patients we treat

• Utilization rules made by an accountable, independent, nonprofit, geographically representative commission, with open meetings and 1/3 of its members representing provider and health facility interests

• Every NM resident having comprehensive health coverage

• Mental and behavioral health care being covered the same as other medical services

• The large patient-care obstacle of out-of-pocket costs being reduced

• Patients no longer being confused and worried about what’s covered and how their coverage works

• Drug prices being negotiated down to reasonable levels for all patients

• No more arguing with multiple insurers regarding the terms of “fair” contracts

• Ready access to dispute resolution for financial issues providers might have with the Plan

• Lower practice and hospital costs for billing and prior authorizations

• Little wasting of health care dollars on marketing of insurance plans and their schemes to only insure the healthy 

• Far fewer middlemen (clerks and reviewers) making health decisions

• Elimination of most of the cost-shifting, for both inpatient and outpatient care

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Are you a health care provider? Click on the brochure for more information.

If you’re a health care provider and have questions, please contact Executive Committee member John Mezoff, MD.