60% of uninsured eligible for financial assistance
In New Mexico, there are still 233,000 uninsured residents. According to Kaiser Family Foundation data, 47 percent of them are eligible for Medicaid (New Mexico expanded Medicaid under the ACA, and coverage is available for people with household income up to 138 percent of the poverty level). Another 13 percent are eligible for premium subsidies in the exchange. As of mid-2015, the New Mexico exchange had just 44,307 people enrolled in private plans, so outreach efforts to enroll a significant number of the remaining uninsured population could push the exchange’s enrollment significantly higher in 2016.
According to Gallup data, New Mexico’s uninsured rate in 2013 was 20.2 percent, and had declined to 13.1 percent by the first half of 2015. This is quite a bit higher than the average for all states that established their own exchanges and expanded Medicaid (New Mexico did both, although their exchange is now operating as a federally-supported state-based exchange).
BCBS won’t offer plans in the exchange in 2016
Earlier this year, Blue Cross and Blue Shield of New Mexico filed a proposal to increase premiums for 2016 by an average of 51.6 percent. The announcement generated headlines nationwide, standing out even among some of the relatively steep rate increases proposed in other states. BCBS garnered about a third of the market share in the New Mexico exchange in 2015, so their proposed rate increase would have had a significant impact on the market.
But in early August, the New Mexico Office of the Superintendent of Insurance (OSI) denied the proposed rate hike, stating that the data submitted with the rate proposal didn’t justify a rate increase of more than 24 percent. BCBS rejected the rate change offered by the state, but came back in the following days and submitted new rates that they claimed had an average rate increase of 11.3 percent. But the OSI has said that they don’t consider the secondary proposal to be a “real offer or realistic offer” and it was not accepted.
Including off-exchange business, BCBS insures about 35,000 people in the individual market in New Mexico, and the carrier confirmed in late August that they will not be offering individual plans in the New Mexico exchange in 2016. BCBS will keep one individual off-exchange plan – a bronze level HMO – with rates unchanged from 2015. This avoids a full market exit, meaning that BCBS will have the option to return to the individual market with additional plans in 2017, if they choose to do so. But the off-exchange bronze HMO plan currently has very few enrollees, so the vast majority of BCBS’s individual market insureds will need to find new plans during the upcoming open enrollment that begins November 1 (it’s likely that many of them would have opted to find new coverage anyway, if the 51 percent rate increase had been approved, because the coverage would have become much less affordable).
The individual market only comprises about ten percent of BCBS’s book of business in New Mexico. They proposed much smaller rate increases for their group market plans, and those were approved by OSI.
Lisa Reid, OSI’s director of life and health insurance, explained that BCBS currently has the lowest rates in the exchange, but they’re not dramatically lower than their competitors. So their proposed 51 percent rate hike would have put their prices significantly above many of the other plans, most of which will only see single-digit rate increases. For 2014, BCBS proposed rates so low that OSI required an increase before the plans could be approved for sale (similar to what Oregon regulators have required for some plans going into 2016). And then in 2015, BCBS didn’t increase their overall weighted average rates at all (note that there were variations from one plan to another however; BCBS of NM had rate changes that varied from a 12.8 percent increase for their HMO plans to a 2.37 percent decrease for their MSPP).
Ultimately, they did end up with significant claims costs that would have justified the 24 percent average rate hike that OSI proposed – but OSI determined that the data presented by BCBS wasn’t sufficient to justify a 51 percent rate increase.
BCBS of NM did receive far more in reinsurance and risk adjustment payments than the other New Mexico carriers, based on 2014 claims. BCBS got nearly $25 million, while three other carriers – Presbyterian, Molina, and NM Health Connections – received a combined total of $11 million.
ACA-created CO-OP doing well
New Mexico Health Connections, one of the four carriers offering plans for 2016 in the New Mexico exchange, is a CO-OP (consumer oriented and operated plan) established with funding provided by the ACA. By March 2015, total enrollment in NM Health Connections had reached nearly 40,000, including on and off-exchange enrollments.
New Mexico Health Connections brought in $10.3 million in premiums during the first six months of 2014, and paid out $9.3 million in claims. From July through September, the CO-OP took in $20.1 million in premiums, and paid out $15.7 million in claims, for a medical loss ratio of 78 percent (the portion of premiums that are spent on medical claims). The ACA requires insurers in the individual and small group markets to spend at least 80 percent of premiums on medical expenses, but the CO-OPs have three years to reach that target. Once admin expenses were included, the CO-OP ended up with a net loss of $4.2 million in 2014. All but three other CO-OPs had significantly higher losses in 2014.
At the start of the third open enrollment period, Hickey described how NM Health Connections is “in excellent shape” financially. The CO-OP in New Mexico is among just 11 nationwide (out of an original 23) that are still operational, and appears to be escaping the insolvency that has crippled more than half of the CO-OPs.
A key aspect of NM Health Connection’s success is that they weren’t counting on significant risk corridor payments from the federal government. Eight CO-OPs (in Colorado, Kentucky, Tennessee, Oregon, Arizona, South Carolina, Utah, and Michigan) have failed in the wake of the 2014 risk corridor shortfall.
Although NM Health Connections is on solid ground financially, a technical glitch has delayed the inclusion of their plans on Healthcare.gov for the first two weeks of the 2016 open enrollment period. Consumers were able to begin purchasing 2016 coverage on November 1, but NM Health Connections plans won’t show up on the exchange until November 15. During the first two weeks of November, 2016 coverage can be purchased directly from NM Health Connections – but subsidies are not available when plans are purchased outside the exchange.
Despite the delayed quoting, NM Health Connections expects to grow their membership significantly during the 2016 open enrollment period. The CO-OP is poised to enroll many of BCBSNM’s insureds whose plans will terminate at the end of 2015.
Average benchmark premium up 7%, NOT 25.8%
Overall, the average benchmark (second-lowest-cost Silver) plan in the New Mexico exchange will be 7 percent more expensive in 2016 than in 2015. When HHS released a report in late October detailing average benchmark premiums in each of the states that use Healthcare.gov, they indicated that the average benchmark increase in New Mexico would be 25.8 percent. But because New Mexico Health Connections plans weren’t appearing in the quote system (due to the technical glitch that is preventing their plans from displaying until mid-November), their rates weren’t taken into consideration when HHS analyzed the change in second-lowest-cost premium.
New Mexico was one of eight states where the HHS report indicated that the average benchmark premium would increase by more than 20 percent; the corrected change (just 7 percent) helps to make a small reduction in the national average benchmark premium increase.
Modest price hikes, but no PPOs available in 2016
The four remaining carriers in the exchange have said that they are ready to accept an influx of new enrollees switching off of BCBS plans. And all four of them proposed much smaller rate increases than BCBS for 2016:
- Presbyterian had asked for a 6 percent rate hike, and the approved rate change was between 3 and 6 percent.
- New Mexico Health Connections (an ACA-created CO-OP) will have rate changes between 4 and 17 percent, depending on the plan. But the CO-OP will end their PPO plans in the individual market at the end of 2015, and will only offer HMO plans for 2016 (they will continue to offer PPO plans in the group market). As explanation for their commitment to HMO’s, New Mexico Health Connections has noted that HMOs are lower-cost and make health insurance more affordable for more people.
- Christus – no rate change for 2016.
- Molina didn’t ask for rate increases in their preliminary proposals; regulators ultimately approved a rate decrease of 2 percent.
None of the carriers in New Mexico’s exchange will offer any PPO options in the individual market for 2016. This is a trend nationwide, in an effort to keep premiums affordable. But it does mean that some insureds will have to switch doctors. There are currently 22,000 BCBS of NM insureds who have a PPO option through the exchange in 2015; all of them will need to select coverage from another insurer in 2016 if they wish to continue receiving coverage through the exchange (BCBS is keeping one off-exchange plan available, but it’s an HMO). And the CO-OP is also dropping its PPO plans for 2016.
NM opts to stay with Healthcare.gov
New Mexico has a unique exchange; the state runs the small business portion, and while the individual exchange is also technically state-run, Healthcare.gov is used to enroll people in individual insurance (ie, a federally-supported state-based marketplace). Initially, the state had planned to establish a state-run website for individual enrollments, and that was still in the works until early spring 2015. But in April, the exchange board voted to continue to use Healthcare.gov, as that was viewed as the less-costly alternative.
New Mexico’s exchange had completed about 75 percent of their enrollment website when HHS changed the design guidelines last fall. The exchange then applied for a $97 million federal grant to help pay for the website changes as well as other costs, but the grant was denied. Ultimately, it was decided that continuing to use Healthcare.gov would be the most fiscally responsible option.
Early in 2015, it was unclear whether New Mexico’s exchange would be impacted by a Supreme Court ruling for the plaintiffs in King v. Burwell. The general consensus was that subsidies would be safe in New Mexico regardless of how the Court ruled, but there was still some uncertainty, since they use Healthcare.gov for enrollment, just like the 34 states that rely fully on the federally-run marketplace.
But all of that is irrelevant now. On June 25, the Supreme Court ruled that subsidies are legal in every state, regardless of how the exchange is structured. Subsidies for 33,000 people in New Mexico are no longer in any jeopardy, despite the state’s decision to continue to use Healthcare.gov for individual enrollment.
2015 New Mexico exchange enrollment
By February 22, after the 2015 open enrollment period and extension had ended, 52,358 people in New Mexico had completed their private plan enrollments through the exchange, including 25,398 people who renewed 2014 coverage (4,542 of those individuals opted to switch to a new plan for 2015 rather than simply renewing their existing coverage). Of the 52,358 people who enrolled in private plans in the New Mexico exchange during open enrollment, 76 percent qualified for premium subsidies.
HHS had projected 43,000 enrollees in the New Mexico exchange by the end of open enrollment, but the state had already surpassed their official goal early in January (admittedly, the goals published by HHS were probably set on the low side this year, to avoid all of the hoopla we saw last year in terms of reaching the stated target). Ultimately, the exchange ended up enrolling nearly 122 percent of their target amount.
Carriers in the NM exchange were predicting total 2015 enrollment of around 50,000 to 55,000 people, which ended up being very accurate. But the exchange itself avoided making any hard predictions for 2015 after falling far short of their goal last year. For 2014, the exchange thought they’d enroll about 80,000 people, and ended up enrolling only about 34,000 – less than half of their target. Some of that was due to technical failures, but the predictions from carriers for 2015 indicates that perhaps the exchange set an unrealistic goal in 2014.
By the end of March, effectuated enrollment in private plans stood at 44,085 people, as some enrollees didn’t pay their initial premiums, and others cancelled their coverage early in the year for one reason or another. Although attrition is to be expected, special enrollment periods mean that people can continue to enroll throughout the year if they have a qualifying event. Between February 23 and June 30, another 5,758 people enrolled in private plans through the New Mexico exchange. 458 of them enrolled during the tax season special enrollment period for people who were previously unaware of the tax penalty for being uninsured. By the end of June, in-force enrollments had grown slightly, to 44,307 people (nationwide, during the second quarter of the year, the trend was a decline in the number of people with in-force coverage, but New Mexico had a small increase instead).
Another 15,522 exchange enrollees in New Mexico were eligible for expanded Medicaid or CHIP between November 15 and February 22. Medicaid/CHIP enrollment continues year-round.
Open enrollment for 2015 has ended. To enroll now for 2015 coverage, you’ll need to have a qualifying event in order to purchase a plan, on or off the exchange. The next open enrollment period begins on November 1, with coverage effective January 1, 2016.
Lower 2015 rates and a new carrier
Sticker shock wasn’t a problem in New Mexico in 2015. Across the four carriers that participated in the exchange in 2014, the state announced in September 2014 that the weighted average premium change for 2015 would be a decrease of 1.65 percent. This was especially good news given that in 2014, the lowest cost bronze plan in the NM exchange averages $217 a month, quite a bit lower than the national average of $249.
PricewaterhouseCoopers LLC conducted rate analysis across the entire individual market, including on and off-exchange plans. For New Mexico, the weighted average they found for all six carriers was an increase of 1.4 percent. But a Commonwealth Fund analysis of just the plans in the exchange found an average rate decrease of 1 percent. And for people who had the benchmark plan (second lowest-cost silver plan) in 2014, the price decrease for 2015 was even more pronounced.
Christus Health Plan also joined the exchange in 2015, bringing the total number of carriers to five. Christus joined Health Care Service Corporation (Blue Cross and Blue Shield of New Mexico), Molina Healthcare of New Mexico, New Mexico Health Connections and Presbyterian Health Plan. There are a total of more than 40 plans available through BeWellNM for 2015.
New leadership and marketing
The New Mexico exchange (NMHIX) is continuing to operate as a federally-supported state based marketplace, and is utilizing HealthCare.gov for individual plan enrollments. Small businesses use the state-run exchange portal.
In late August 2014, NMHIX hired CEO Amy Doud, who came to them from the Idaho exchange that she had run for 15 months (Idaho was a federally-supported state-based exchange in 2014, but became a fully state-run exchange in time for the 2015 open enrollment). Doud’s focus is on working with agents and brokers and promoting one-on-one assistance to drive up enrollment numbers, as much of Idaho’s success during the first open enrollment was attributed to their strong partnership with agents and brokers.
Just a few weeks before the start of the second open enrollment period, NMHIX hired a new Director of Communications and Outreach. Linda Wedeen has three decades of experience in marketing and communications in New Mexico.
The exchange was also hiring additional enrollment counselors leading up to the 2015 open enrollment, and was particularly focused on recruiting enrollment counselors who would be able to reach out to the Native American population in the state.
New marketing and PR team
In the summer of 2013, NMHIX began working with Milwaukee-based marketing firm BVK to market and promote the exchange throughout the state. In July 2014, the exchange board unanimously voted to renew the BVK contract for $6.2 million. But in September, NMHIX Chair Dr. J.R. Damron expressed dissatisfaction with the marketing approach, and highlighted recent survey numbers that found the majority of uninsured adults in NM were unaware of the services the exchange provides, and even more had not heard about the exchange on various media sources.
The agreement with BVK was terminated and the marketing contract was put out for bidding in September 2014. In early October, 18 firms submitted bids; 12 were local New Mexico companies. BVK did not bid for the new contract, but said it was committed to working with the new contractor for a smooth hand-off. The contract was ultimately awarded to Garrity Group PR in November, along with K2MD.
The ACA’s subsidies
According to a report released by HHS in mid-June, the average after-subsidy premium in the New Mexico exchange was $120/month in 2014, significantly higher than the $82/month average across the 36 federally-facilitated marketplaces (FFM). And only 78% of New Mexico exchange enrollees received subsidies, compared with 87% across all of the FFMs.
The average after-subsidy premium in New Mexico was the fifth highest among the 36 FFMs, but NM Superintendent of Insurance John Franchini attributes that to one of the four carriers in the exchange charging premiums that were 20 to 25 percent higher than the other three carriers. He didn’t say which carrier it was, but noted that it was a carrier with which people were already familiar, and about a third of the enrollees picked that carrier’s plans, despite the higher premiums.
Since the tax credit subsidies are based on the cost of the second-lowest-price Silver plan, an outlier plan on the high end will mean higher average after-subsidy premiums if a significant number of people choose to apply their subsidy towards the high cost plan instead of selecting a less expensive policy. Franchini notes that even though $120/month is higher than the average in most of the other FFM states, it’s still far less expensive than people would have been paying prior to the implementation of Obamacare and the premium tax credits.
As of mid-2015, the average subsidy in the New Mexico exchange was $196/month – significantly smaller than the $270 national average. But the average pre-subsidy premiums were also lower in New Mexico: $323/month, as opposed to $364/month nationwide (as of the end of open enrollment; attrition throughout the year changes the averages). In March, the after-subsidy average premium in New Mexico was $127/month. Nationwide, it was $101/month.
Be Well New Mexico’s 2014 enrollment
By April 15, 2014, 34,966 people had completed their private plan selections through the New Mexico Exchange. This was roughly 11 percent of the eligible population, and was significantly lower than the state had projected.
An additional 30,147 exchange applicants were eligible for the state’s expanded Medicaid program during open enrollment. But Medicaid enrollment is year-round, and most eligible residents in New Mexico have enrolled directly with the state’s Medicaid program rather than going through the exchange. By late November, the total new enrollment in Medicaid had reached 170,000. That’s more than 76 percent of the total eligible population, making New Mexico one of the most successful states for Medicaid enrollment.
New Mexico had the ninth-highest drop in uninsured rate during the first half of 2014. According to a Gallup poll released in August, the state’s uninsured rate was 20.2 percent in 2013, and had dropped to 15.2 percent by mid-2014.
An expensive exchange
New Mexico’s exchange had the seventh highest cost per enrollee in the nation in 2014, coming in at about $6,181 per enrollee when total start-up and operating expenses were divided among the 32,062 people who had selected a private plan by the end of March 2014.
However, nearly three thousand more New Mexicans completed their Obamacare enrollment in the first half of April, which brings the total cost per enrollee down to about $5668. This is still far higher than the national average of $922 though. The exchange must be financially self-sufficient by 2016 and is still working out the details of how to get there.
A unique exchange design
New Mexico settled on a unique approach to its health insurance marketplace. For individuals seeking health insurance, the state operates Be Well New Mexico in partnership with the federal government. Small businesses use the state-run SHOP exchange.
The state had previously announced that it would run all aspects of the exchange on its own, the exchange board determined in May 2013 that it did not have enough time to get computer systems up and running. (While Utah is also using a hybrid approach, the specifics are different. Utah is leaving the individual exchange exclusively to the federal government and operating the small business exchange on its own.).
Originally New Mexico had planned to have its own individual exchange operational by October 1, 2014, in time for the 2015 open enrollment that begins on November 15. But ultimately the state decided to continue to use HealthCare.gov for individual plan enrollments in 2015. In April 2015, the exchange board voted to continue to use Healthcare.gov, and plans to build a fully-state-run exchange have been shelved for now.
Enrollees can also call 1-855-99-NMHIX for personal assistance with individual coverage, and the exchange created a website where consumers can see average prices for individual plans in order to get an idea of what’s available from the five participating insurers without having to access the full services at Healthcare.gov.
The state-run SHOP exchange
By March 18, the state-run SHOP exchange had enrolled 524 people, including 345 employees and 179 of their dependents. Nearly 1500 small businesses had started their applications in the SHOP exchange by the end of 2013, and several thousand employee names had been entered into the system. But by December, total enrollment was still only around 800 people. SHOP enrollment runs year-round, so businesses can continue to apply throughout the year.
The SHOP exchange needs $1.5 million in annual funding starting in 2015 when it must operate without financing from the federal government. In December 2014, the exchange board voted to impose a fee on all health insurance policies sold in the state of New Mexico, in order to raise the funds needed for Be Well New Mexico’s SHOP exchange in 2015 and beyond.
Establishing the exchange
New Mexico’s path to establishing an exchange was atypical. New Mexico Gov. Susana Martinez, a Republican who opposes the federal health reform law, has been the driving force in establishing an exchange and advocating for the state-run model.
Martinez designated that the Health Insurance Alliance develop the state exchange. The Health Insurance Alliance is a nonprofit association of health plans created by the state Legislature in 1994 to offer health insurance coverage to small employers. Later, the Senate and House both approved a state-run exchange.
New Mexico health insurance exchange links
Guide to the New Mexico Health Insurance Exchange
Includes details about carriers, important dates, eligibility and enrollment information
New Mexico Health Insurance Exchange
Administrative and start-up information
State Exchange Profile: New Mexico
The Henry J. Kaiser Family Foundation overview of New Mexico’s progress toward creating a state health insurance exchange.