Login Register Subscribe
Current Issue

Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

N.M. bill would set health care service spending level

Reprints

SANTA FE, N.M.—Health insurers and health maintenance organizations selling group coverage in New Mexico would be required to spend at least 85% of every premium dollar on health care services under legislation the governor is expected to sign.

H.B. 12, which would take effect in 2011, would require insurers that fail to comply with the 85% reimbursement requirement to issue a dividend or credit against future premiums to all policyholders in an amount sufficient to make up for any shortfall.

The legislation, which New Mexico Gov. Bill Richardson is expected to sign, would not apply to individually underwritten health insurance policies, contracts, plans or limited benefit plans supplementing major medical coverage, including Medicare supplement, vision, dental, disease-specific, accident, hospital indemnity, long-term care or disability.

According to a February report by Families USA, a Washington-based consumer watchdog group, 13 states require insurers to meet minimum medical loss ratios in the individual market, and 13 states have established medical loss-ratio requirements in the small-group market. Five states have established requirements in the large-group market.

Federal health reform legislation pending in Congress also would set spending requirements. Both the House and Senate bills would force insurers to spend the vast majority of premium revenue on medical care for their customers, reducing the amount available for profits, executive salaries, sales and administration. The Senate bill would require insurers to spend at least 80% on medical care and quality improvements, while the House bill specifies 85%. Insurers that don’t comply would owe rebates to customers.

America’s Health Insurance Plans, a Washington-based industry trade group, said insurers currently spend an average of 87 cents of every premium dollar on direct medical care. Other estimates, such as those from Wall Street analysts, put the average spent on medical care in the low 80% range.