Health Coverage For New Mexicans Committee – Recommendations for Next Steps

1. Health Coverage For New Mexicans Committee – Recommendations for Next Steps State Coverage Institute September 26, 2007

2. Points for Today’s Discussion • Health Coverage for New Mexicans Committee – Composition & Charge • Universal Health Coverage Models Analyzed and Outcome Highlights • Recommendations for Next Steps

3. Health Coverage for New Mexicans Committee (HCNMC)

4. Health Coverage for New Mexicans Committee COMPOSITION • Appointed in August 2006 jointly by Governor and Legislative Leadership, chaired by Lieutenant Governor • 23 voting members (of which 6 were legislators); and 4 advisory members (of which 2 were legislators) • Includes regional and ethnic representation from the NM Senate and House, business, labor, insurance industry, health care providers and advocates • Met 11 times from August 2006 to June 2007

5. Health Coverage for New Mexicans Committee CHARGE • Develop or identify 3-5 models for analysis • Each model to provide health coverage for all New Mexicans • regardless of ability to pay or income level • remove lapses in coverage because of unemployment or changes in health providers • identify ways of keeping costs in check • include coverage for individuals with high health care needs or pre-existing conditions • optimize the use of federal matching funds • Receive and consider public input • Assist LCS in procurement of national experts to conduct analysis of models = Mathematica Policy Research, Inc. • Principles, minutes, presentations, reports at: http://insurenewmexico.state.nm.us/HCNMC

6. Overview of 3 Health Coverage Models Analyzed for HCNMC

7. New Mexico Health Security Plan Single, statewide comprehensive health insurance plan for all residents who enroll • Services mirroring those of NM state employees • Premiums scaled to income • Employers pay a contribution as a percentage of payroll • Self-insured employers elect to participate • Administered by an appointed commission that would negotiate provider fees and facility budgets • Cost savings through reduction in administration of multiple health insurance companies and through provider rate negotiations & oversight

8. New Mexico Health Choices Plan Market-based universal coverage through government-subsidized vouchers provided to individuals • Single, statewide risk pool replaces individual and group health insurance markets • Range of private and government options to obtain health insurance • New Mexicans not covered by public programs such as Medicaid would be given vouchers to buy insurance through commercial carriers pre-selected by a newly created Alliance • Version 1 coverage on an individual basis and employers contribute via payroll tax • Version 2 employers continue to offer coverage and exempted from payroll tax for workers enrolled in their health plan • Insurance coverage would be mandatory for all residents

9. New Mexico Health Coverage Plan Combined public and market-based universal coverage plan that preserves roles for both the current public and private health care system • Focuses on coverage for currently uninsured New Mexicans • Includes expansion of Medicaid for low-income families and workers • Financial incentives for employers to provide health insurance for workers (tax credits & fair share contributions) • Requires all people living in NM to buy commercial insurance, enroll in employer-sponsored insurance or enroll in state- or federally-subsidized insurance if eligible • Enhanced funding for primary care clinics and FQHCs • Cost, Access & Quality Council

10. Highlights of Mathematica StudyUNINSURED • Over 400,000 (21.1%) people in New Mexico do not have health insurance (CY 2005) • 41% of NM employers do not provide health insurance • 85,000 (16.3%) children 0-18 are uninsured • 26% of New Mexicans who are under age 65 and not institutionalized are uninsured 6 months or more • Most part-year uninsured are children 6-18 and adults under age 30 (especially adults under 100% FPL) • Half of New Mexicans who are uninsured 6 months or more during the year are now Medicaid/SCHIP eligible (counting expansions for children and low-income adults) • “Churning” (moving in and out of coverage in commercial or public markets) increases administrative cost and may compromise access and quality of care

11. Highlights of Mathematica StudyCOSTS • $6.11 billion will be spent in New Mexico on health care for this population in 2007 (excluding Medicare) • Costs to cover all non-elderly non-institutionalized New Mexicans = $5.93 billion (HSP), $6.3 billion (HCP) or $6.7 billion (NMHCP) • Cost of each model might be lowered (or increased) by changing assumptions about rates paid to providers, type and amount of services or benefits offered, wellness and public health initiatives, and actions to reduce non-medical costs • All three models have positive impacts on the state’s economy due to increased federal dollars and spending, especially in rural areas

12. Highlights of Mathematica StudyCOSTS (continued) • Within five years, it will cost more to do nothing and have the number of uninsured New Mexicans grow than to implement some form of coverage for all residents of New Mexico • Many New Mexicans are currently or will soon be eligible for employer-sponsored or public programs of health coverage, if adequate state general funds are appropriated to draw available federal match and if efforts are made to assist and/or require those eligible to enroll • ERISA and federal tax laws may impact (but not necessarily impede) implementation of some aspects of each of the models and need to be considered to avoid unintended consequences

13. RECOMMENDATIONS FOR NEXT STEPS

14. Next StepsPOLICY • Creation of a Single Statewide Appointed Health Care Authority • Manage products to increase coverage and set minimum benefits • Serve as a connector for coverage products • Set standards for performance by insurance carriers & providers • Identify and implement activities to increase quality and access and control growth in costs • Consolidate state & quasi-state health coverage/policy agencies • Create a “Culture of Coverage” • Require individuals to have coverage by 2010 • Require employers to offer insurance or contribute • Create a package within Medicaid that persons not covered by public programs can buy into based on income under 400% FPL • Allow employers not currently offering insurance and not eligible for public programs to buy into state employees risk pool

15. Next StepsPOLICY (continued) • Insurance Reform • Require insurance companies to spend 85% of premium on medical services • Require insurance companies to offer coverage to anyone with limits on percent that can be charged above average cost • Phased reduction of rating up based on experience of individuals/groups • Require providers to accept any form of insurance coverage with limits • Common data reporting for all insurance companies products • Require brokers/agents to offer public products • Risk equalization • Health Care Cost, Access & Quality • Require phased-in electronic health transactions • Increase provider recruitment/retention activities • Moratorium on insurance benefit mandates until 2010 http://insurenewmexico.state.nm.us/HCNMC

16. Next StepsPROCESS • Draft legislation to take to legislative committees and stakeholders during 2007 for introduction 2008 • Charge authority to do additional analyses, including developing minimum to comprehensive benefit plans • Talk with IHS, tribes and rural and urban Indian interest groups • Create HCNMC report and present to Governor • Require effective prevention, wellness & chronic disease management programs • Consider end-of-life legal and medical issues that increase costs and limit choice

17. Next StepsFURTHER ANALYSES • Savings/costs to employers of payroll taxes v premium reductions • Cost of full Medicaid enrollment • Cost of allowing buy-in to Medicaid and state employee plans/pools • Impact on workers comp structure & plan • Methods to improve and enhance Medicaid/SCHIP enrollment (including private partnerships) • Further ERISA and IRS Section 125 legal analysis • PRC and DOI roles and authority • Value & impact of contracting Medicaid to private sector • Feasibility of Medicaid waivers for higher income • Cost comparisons of Medicare Advantage Plans