Despite Obamacare, NM’s high-risk insurance pool stays afloat

By Rob Nikolewski │ New Mexico Watchdog

SANTA FE, N.M. — Earlier this summer, the board at New Mexico’s high-risk insurance pool extended a contract worth up to $600,000 to an Albuquerque consulting group to run the day-to-day operations of the pool, which was designed to offer insurance to people who had trouble getting coverage.

But wasn’t the Affordable Care Act, colloquially called “Obamacare,” supposed to make high-risk insurance pools obsolete?

“I’ve been asking that for two years,” John Franchini, the New Mexico Superintendent of Insurance, said with a laugh. “I do know the federal Affordable Care Act says all these pools should be dissolved. But we have a problem in New Mexico. We have a statute that created the New Mexico Medical Insurance Pool and since that statute is active and in place, we have to make sure we don’t violate that.”

Franchini said his office is working on legislation to limit the pool’s population.

There are currently 5,600 patients in the New Mexico Medical Insurance Pool, Franchini said, compared to about 10,000 at the beginning of last year.

Franchini said he’d like to see the numbers reduced to “no more than 1,000 — that’s my expectation.”

But if the ACA prohibits insurance companies from denying patients with preexisting medical conditions, why does the pool still exist?

“I think the answer is: not every New Mexican can avail themselves of the Obamacare system,” said Gabriel Parra, staff attorney for Presbyterian Healthcare Services and a member of the NMMIP board. “We didn’t want to put New Mexicans at risk by kicking them out of the pool and we wanted to do that in a more thoughtful way.”

New Mexico isn’t alone.

According to the National Association of State Comprehensive Health Insurance Plans, 35 states had high-risk insurance plans before the ACA went into effect.

Of those, 12 states have eliminated their pools and six are the process of shutting them down, but 17 other states haven’t made any specific plans to drain their pools, so to speak. Click here to see the state-by-state breakdown.

But won’t there come a time when the existence of the pool is superfluous?

“That’s a matter of great debate among the board members,” said board vice chairman Jason Sandel. “Some folks feel like it needs to happen by Dec. 31, 2014. Others feel that, based upon the experience of the implementation of the Affordable Care Act, that that period be extended to 2016.”

“I don’t think we’ll ever be down to zero because I think there will always be a few people in transition that are going to need a safety net for a short period of time,” said Franchini in a telephone interview with New Mexico Watchdog. “We have some people in the pool who have no other place to go.”

Examples include those who are under the age of 65 who are buying Medicare supplements through the pool and patients with severe kidney problems that are on dialysis.

There’s also another wrinkle: While those who are in the country illegally cannot sign up under the ACA, there are people who are not U.S. citizens in the New Mexico high-risk pool. That’s because there is no requirement for proof of citizenship, only for residency, to be eligible for the New Mexico plan.

Officials say most of the undocumented patients in the pool are sick children.

“We’re talking about over 200 children,” Franchini said. “We’re looking right now at how we’re going to have that funding source provide these same kind of coverages for these children outside of the pool … They’ll probably end up going to one to four insurance companies that will spread the risk.”

“Historically speaking, there has been no citizenship test to access care through the pool,” said Parra. “How we deal with them is really a question for the Legislature because the statute doesn’t give (the board) the authority … to exclude them.”

The New Mexico Medical Insurance Pool board of directors recently extended its contract with the Delta Consulting Group, based in Albuquerque, to continue managing the operation of state’s high risk pool.

Franchini said the contract pays Delta and its president and executive director of the pool, Debbie Armstrong, up to $600,000 — a $300,000 base package, plus another $300,000 in incentives to bring the numbers in the pool down to what the board considers to be a minimal level.

Not every member of the board thought a contract worth up to $600,000 was appropriate.

“I personally think that it’s a little much,” said Sandel, who voiced concerns over the bonus package. “There’s quite a bit of incentive built into that contract … to move people out of the pool.”

“For me, it really wasn’t an incentive to move them out as it was a recognition that as you move people out it takes work,” Armstrong said.

“The incentive program is a very fair one,” Franchini said. “It saves the medical insurance pool and the state of New Mexico huge amounts of money.”

Franchini said depopulating the pool could translate into savings of $80 million in premiums for insurance companies in the state. “It is very hard to do this work.”

As for the long-term existence of the pool in New Mexico, that’s still up in the air.

“We ought to be thoughtful and predictive on how we depopulate the pool, ” Sandel said. “In other words, that we don’t just hope people leave, that people begin to build an expectation of when it is that their coverage is going to end.”

“Our goal is to get this pool as small as possible as soon as possible,” Franchini said, “and get all those people into Medicaid or the state exchange.”

Contact Rob Nikolewski at rnikolewski@watchdog.org and follow him on Twitter @robnikolewski