My view: PRC-Feldman bill protects consumers

Jason Marks |

3/9/2008 - 3/9/08

As everyone knows by now, the 2008 New Mexico Legislature was unable to come to consensus on any of several competing health care reform proposals. Except that's not entirely true.

Moving through the Legislature outside of the media spotlight, a health insurance reform bill that originated with the Public Relations Commission and its then-Chairman Ben Ray Luján, was passed and signed into law. This legislation, Senate Bill 226, sponsored by Sen. Dede Feldman, D-Albuquerque, puts New Mexico into the forefront of consumer protection in at least two areas that help families obtain and keep needed coverage.

New Mexico has become the second state in the country to enact a law-limiting insurers' ability to rescind health insurance policies and/or deny paying claims based on mis-statements on the insured's original application for coverage. Until SB 226, insurance companies could retroactively rescind coverage during the first two years of a policy after a patient developed an expensive medical condition that the insurer didn't want to cover.

The insurer could decide that they'd rather refund premiums and stick the policy holder with the responsibility for paying large medical bills. The insurer merely had to point to a relevant mistake or omission on the original application for coverage — even if that mistake was unintentional. The PRC/Feldman bill raises the standard of proof so as to require the insurer to show that the applicant's statements or omissions were willful or fraudulent.

SB 226 also extends the allowable lapse in "creditable coverage" from 63 to 95 days. Currently, if someone loses coverage under a group plan and applies for alternative coverage within 63 days, the period during which the individual was not covered is counted against any waiting periods on pre-existing conditions. The bill allows more time to seek alternate coverage. Several other states have increased their maximum lapse to around 90 days, but at 95 days, New Mexico has the most consumer-friendly standard in the nation. Lastly, SB 226 raises the minimum cap on coverage for policies under the N.M. Minimum Healthcare Protection Act from $50,000 to $100,000.

This all started during the summer of 2007, when PRC Chairman Ben Ray Luján arranged for several PRC discussions on the subject of health care and health insurance reform. With unanimous support from the Commission, Luján directed the PRC's Insurance Division to look for ways to improve health insurance coverage for New Mexico families. As the options began to come together, Commissioner Luján, our Superintendent of Insurance, Mo Chávez, and I met with Sen. Feldman to discuss legislative approaches to health care reform in New Mexico. SB 226 was the result. The bill's enactment fixes the three "gotchas" that have kept needed health insurance coverage from some families while we wait for comprehensive health care reform.

Although SB 226 received little local media coverage, the PRC/Feldman health insurance reform legislation has drawn national attention, including a front-page story in USA Today, coverage in trade journals and inquiries from ABC Nightly News.

The most important part of the story is, of course, that the reforms that have now been signed into law by Gov. Richardson will provide real benefits to consumers. But almost as important to the long-term is the change that this effort signifies at the PRC's Insurance Division. Only two years ago, a different superintendent of insurance was in office and his main legislative priority that year was a bill to relax certain regulatory standards so that troubled insurance companies could relocate to New Mexico. Lobbyists were involved, as were rumors of campaign donations.

Fast forward to today, where we are seeing the fruits of commitments Commissioner Luján and I made to clean up the Insurance Division, re-orient it more towards protecting and serving consumers, and to appoint a replacement superintendent of insurance who shared our values and vision. New Mexico might not have achieved all the health care reform progress that was hoped for this past year (or that is needed), but we have made to a point where we are getting national recognition for our leadership in protecting insurance consumers, and not for our regulatory failings and scandals.

Jason Marks is the chairman of the Public Regulation Commission.