Who will regulate health insurance?

The future of health care – or at least how we pay for it – is confusing, to say the least.  One question is what happens to New Mexico state authority under the Obamacare law.

New Mexico contains quite a few mandates – services insurance companies are required to cover.

For example, some years ago a prospective adoptive parent found that state regulations required health insurance for the adopted child, but insurance companies weren’t covering adopted children.  A legislator was asked for help, and a law was enacted to require that coverage.  Hence, a mandate.

Current law mandates coverage for mammograms, colorectal screenings, and a whole list of other treatments.  Some of them are quite narrowly written – a specific treatment for a specific cancer, for example. Heartbreaking stories may lie behind some of these provisions – a badly needed treatment denied, a call to a legislator, and a new mandate written into law.

Whether mandates add to the cost of insurance can be argued.  One side says people should pay for their own routine preventive screenings.  The opposing argument says screenings catch serious health conditions early, saving money because early treatment is so much more cost-effective.  Early detection also prevents pain and suffering, which is measured in non-monetary values.  Experience shows many New Mexicans don’t get those services unless they are covered.

New Mexico law allows minimal insurance policies as an alternative, but even that provision contains mandatory coverages and, arguably, is not so minimal.

Our choice in insurance plans is limited to companies willing to be accountable to New Mexico regulators for fulfilling their commitments.

Which brings us to the federal Affordable Care Act:  how it will interact with state law, who – the states or the feds — will provide regulatory backup, and a word about what could have happened if the election results had been different.

A basic fact of insurance is that the consumer pays in advance for the promise that the insurance company will pay for unknown future costs.  Then it’s up to the insurance company to fulfill its promise, which gives great power to insurance companies, and is why regulators are needed.

A feature of Obamacare is an “Essential Benefits Package” – a minimum standard for what all policies must contain if sold through the state’s exchange.  New Mexico has a multi-agency task force, led by the Human Services Department, working on developing an exchange.  According to just-retired Sen. Dede Feldman (D-Albuquerque), developing this package and building an exchange involves decisions about how to coordinate federal requirements with state law, including mandates.   While not everything is clear, it appears that the federal law leaves much authority with the states.

During the 2012 campaign, some Republicans, including  New Mexico Congressman Steve Pearce, argued for replacing the Affordable Care Act, and an oft-repeated element of the replacement plan would be to allow insurance to be purchased across state lines.  While Obamacare probably won’t be repealed under the current administration, this interstate idea is not necessarily dead and deserves a little examination.

If health insurance were purchased across state lines, who would regulate it? Would it establish a new federal agency to replace state insurance regulators? Perhaps less protection for consumers?  Consolidation of many insurance companies into fewer very big ones, as happened with banks when they were deregulated?

Nobody I spoke to could answer this question.  I just know that whenever consumers rely on insurance, there is a need for a regulator who can help consumers get what they’ve paid for.   The legislature will be grappling this year with moving the Insurance Department out of the Public Regulation Commission and setting up a new mechanism for choosing a superintendent.    It’s critical that we are able to select qualified superintendents and that we invest in a strong, pro-consumer department.


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