Health Insurance Rate Hike on Poor & Rural NM Go Into Effect While Insurer Hoards Billions in Profits
Albuquerque – New Mexicans lost an important fight for affordable health insurance earlier this year and on Friday Blue Cross Blue Shield of New Mexico will raise the rates on more than 30,000 mostly poor and rural New Mexicans who have no other options to obtain health insurance.
In order to beat new provisions of the Affordable Care Act (affectionately known as Obamacare) that now limit insurance premium increases to less than 10% a year (much higher than the cost of inflation) and require insurance companies to publicly justify such increases, BCBS of New Mexico rushed through a request for its second double-digit rate increase on individual plans late last year.
After advocate outcry and several hearings, the company settled with the state’s insurance commissioner for a 6.9% increase in 2012. That increase will go into effect on Friday.
Unlike most other health insurance companies, BCBS is a nonprofit, allowing it to avoid having to disclose its earnings, expenses or even executive compensation. However, the public watchdog PR Watch reported last year that BCBS’s hoarding of more than $52 billion – read that again, billion with a “B” – in cash threatens to undermine its claims to be not for profit. As PR watch notes:
“Our analysis of the financial position of 33 Blue Cross plans suggests that their capital position has reached a level that’s difficult for the nonprofits to justify, and if sustained, will lead to significant tension between the nonprofit Blues, regulators and consumer activists,” McDonald wrote. “According to our data, the nonprofit Blues held a total of $52 billion in capital at the end of 2010, or more than $29 billion above minimum regulatory requirements.”
One of the ways the Blues have been able to amass such fortunes is by avoiding paying for care in exactly the same way the big for-profit companies do. They are rapidly moving their policyholders into high-deductible plans and spending far less on medical care — and far more on overhead — than they have in the past.
The latest effort to raise premiums in New Mexico is not unique but it is disturbing. The patients affected by this increase are mostly rural New Mexicans who have no other options for health insurance. Without competition, those who are health care conscious and have the ability to pay upfront for insurance are forced to pay whatever the cost BCBS sets. Those who cannot afford to pay simply drop coverage and rely on publicly subsidized emergency rooms for primary care or avoid seeking care at all.
For these New Mexicans, full implementation of Obamacare can’t get here soon enough. New provisions, like a health insurance exchange, are supposed to provide that competition that is currently lacking in many parts of the state. However, even that glimmer of promise is viewed with great skepticism.
As we reported last month, Governor Martinez’s choice to design the new “consumer oriented” insurance exchange is none other than former Bush administration insider and ALEC headliner Michael Leavitt whose propensity for using taxpayer-funded emergency response planes as a private jet service brought him notoriety. His nonprofit business management practices were so bad that Congress proposed laws to stop him.
Together, Leavitt and BCBS are charged with designing the new health insurance exchange to ensure that consumers, like those who have seen their rates jump double-digits in less than two years, have access to affordable care and fair competition. I can’t wait to see how much more fair and affordable will cost us.
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