Transparency, facts will protect insurance consumers and companies

It is no secret there are flaws in the current process used by the state’s Division of Insurance to evaluate health insurance rate requests. The recent Blue Cross Blue Shield case is one illustration of these deficiencies.

The existing process for reviewing rate increase requests is outdated and leaves policyholders in the dark. This lack of transparency and fairness in rate setting is unacceptable.

This legislative session I am working with the insurance superintendent, Public Regulation Commission, the Attorney General’s Office, and some members of the insurance industry to address this issue.

SB 208/499 (a combined bill) requires transparency and protects consumers and companies alike. The burden must be on health insurance companies to prove to the superintendent and policyholders that large rate increases are reasonable and not excessive. If insurers truly need to raise rates on New Mexico families, then I believe they should be willing to open their books and justify their requests. Many of my colleagues, Democrats and Republicans, agree.

Let me be clear – I believe health insurance companies should be solvent. They have a right to premium payments that are sufficient to cover claims, to make a fair profit and to ask for a timely decision. However, a fair profit should be determined by a fair hearing, one where all relevant facts are fully disclosed – in plain and simple language.

In addition, New Mexico families deserve a meaningful voice in the rate review process, as well as large companies. It’s called fairness.

Several responsible health insurers are on board with my proposal. They recognize the need for a more open and rigorous process that will protect them as well as their subscribers from disasters like the Blue Cross case. They are not interested in making some kind of insiders’ deal with the Department of Insurance. They also understand that new federal laws will force a federal version of transparency on them if the state does not clean up the process and give the superintendent better tools with which to work.

To those insurers, thank you for being on the side of fairness.

A more fair process

In an environment of 20-30 percent annual rate increases, consumers need to know whether their rates are fair and reasonable. Senate Bill 208 and 499 ensures that everyone gets ready access to the relevant financial information, posted online, and has the opportunity to comment, in addition to the assurance that all this will be weighed by the superintendent against an updated legal standard already adopted in a number of states.

Both policyholders and insurance companies can present their positions in an open hearing. The attorney general can intervene for consumers. The superintendent must support his decision based on the evidence, and the PRC review – if requested by a policyholder or an insurer – must be done by a hearing officer before the commission rules as an appellate body.

Will all of this result in lower health insurance rates? Will rates increase at a more moderate rate? That is yet to be determined. However, what we will have is a more transparent and fair process. A process where there is greater certainty that a rate increase is merited, that the health insurance company gets sufficient premium to be financially sound, and that an increase does not unfairly reward health insurance companies at the expense of policyholders.

Feldman, a Democrat, represents District 13 in the New Mexico Senate. For more information, check the Legislature’s website for the Senate Judiciary substitute for SB 208 and 499.