The health care debate

State officials: Washington isn’t honoring promise

N.M. Superintendent of Insurance John Franchini.

Bryant Furlow / New Mexico In Depth

N.M. Superintendent of Insurance John Franchini.

New Mexico Superintendent of Insurance John Franchini will ask federal officials to leave unchanged a high-risk pool for critically ill New Mexicans the state set up in 2010 at Washington’s request.

Franchini’s letter, which should go out today, is one front in a little-known battle the New Mexico Medical Insurance Pool is waging with Washington to protect 1,568 sick New Mexicans from paying more for health care the last six months of this year.

“I’ll have a letter by tomorrow morning demanding the federal government leave it up through the end of the year as promised,” Franchini, who chairs the medical insurance pool, told the agency’s Board of  Directors on Tuesday morning. “If enough (state) superintendents do this, it could support us.”

The pool's resistance comes at a time when the federal government is planning to move the critically ill population into a new health coverage plan as of July 1. The new plan could push health coverage out of reach for many by raising deductibles and out-of-pocket costs, Reena Szczepansski, the medical insurance pool’s executive director, said.

“These are folks who are struggling with some major diseases,” Szczepansski said. “They are overwhelmingly low-income. To make the change in the middle of the year is just not right.”

The pool administers health coverage for the critically ill population as well as for a separate program that covers thousands of additional critically ill New Mexicans who won’t be affected by the dispute between Washington and New Mexico.

The dispute between the Medical Insurance Pool and the federal government began earlier this year when Washington started trimming money earmarked for federal high-risk pools started in 2010. The pools were started to help critically ill individuals across the nation who couldn’t qualify health coverage in commercial insurance markets, mostly because of pre-existing conditions.

Washington’s recent belt-tightening has provoked protests from Congress and from at least one state’s top insurance official.

In February, Washington told the New Mexico Medical Insurance Pool to stop enrolling individuals in the high-risk pool it manages for the federal government. Washington followed that up three weeks ago with news that it would pay only so much of the costs necessary to cover the 1,568 individuals from July through December of this year. The critically ill population would be covered starting Jan. 1 under the federal health care law.

The medical insurance pool doesn’t think Washington’s estimate will cover the population through the end of the year.

Federal officials have said they can pay $12.2 million to cover the population for the last half of 2013, millions of dollars less than the estimate the state medical insurance pool has said it would cost to cover the population. Last year, 39 individuals in the federal high-risk pool alone generated $7.5 million in claims, Szczepanssk said.

More than half of the 1,568 individuals potentially affected live at or below twice the federal poverty level -- $22,344 for an individual and $46,104 for a family of four. Meanwhile, the new program would require $1,250 deductibles, more than twice what they pay now, Szczepansski said. The individuals also would pay larger out-of-pockets costs to trigger health coverage and also might face uncertainty over whether their current doctors and specialists will treat them.

Szczepansski and other staff at the New Mexico Medical Insurance Pool, as well as the pool’s board, are attempting to keep the federal government from transferring the population into the new program. For the last few weeks, staff has negotiated with the federal Center for Consumer Information and Insurance Oversight. Staff also has contacted New Mexico’s congressional delegation for help.

Officials at the federal agency couldn’t be reached for comment Tuesday.

The pool doesn’t have much time.

The federal government will send out a message around June 10 to the 1,568 New Mexicans informing them of the coming change starting July 1, a timeline that at least one board member thought was legally questionable Tuesday.

“I want to know if this is even legal,” Jason Sandel, the New Mexico Medical Insurance Pool’s vice chairman, said during Tuesday morning’s board meeting.

Under New Mexico law, a state health insurance carrier is required to give beneficiaries 60 days notice of changes to a plan that aren’t favorable to them.

During the more than hour-long meeting, Sandel and other members groped for ways to guarantee health coverage for the critically ill population as they attempted to find ways to pay for a population of mostly high-cost individuals.

Many in the federal high-risk pool struggle with diseases like cancer, HIV, diabetes or mental illness and hail from all over New Mexico, although many live in the state’s population centers, Szczepansski said.

One board member wondered Tuesday if the state could funnel Medicaid money to help make up the difference to guarantee coverage of the critically ill population through 2013. Medicaid is the government’s low-income health insurance program.

“There isn’t any way that we could use Medicaid dollars to help subsidize or any way provide claims dollars for these folks,” Milton Sanchez, director of New Mexico’s Office of Health Care Reform, responded. “We don’t have the budget.”

Sandel floated an idea of levying larger fees on the state’s health insurance carriers who currently pay most of the medical insurance pool’s operating costs through assessments.

“You’re asking the insurance carriers to pick up another $6 million in costs,” said board member Terri Chin of Lovelace Health Systems Inc.. “If it were your business and you were asked to pick that up in the last six months of the year, you’d have to think hard about this.”

Sandel said he understood Chin’s concern.

“I think it’s the right thing to do,” he said of the larger fees. “I don’t think it’s the right thing to do by way of the carriers. I am asking for the carriers and the state of New Mexico to accept the liability of something that the federal government has abandoned us on.”