New Mexico Overhauling State Insurance Regulation

As New Mexico prepares to enroll tens of thousands of people into health plans, the state is revamping the government regulator that oversees insurance prices and policies.

Under a constitutional change approved by voters this month, the regulation of insurance companies will no longer be a responsibility of the five-member elected Public Regulation Commission. Instead there will be an appointed regulator who will run the independent Office of the Superintendent of Insurance starting next July.

The changes are part of the most significant regulatory overhaul since the PRC was created by a 1996 constitutional amendment merging two regulatory agencies. If that wasn’t enough, the regulatory restructure comes as New Mexico and other states grapple with health insurance reforms required by a 2010 federal law.

It’s the job of the Legislature early next year to decide details of the new regulatory system. Lawmakers will determine the membership of a commission that appoints the insurance superintendent and legislators must establish the qualifications for who serves as the top insurance regulator.

“The governor and Legislature are going to have to come together on this because the governor has the veto. They’ll have to work together with us to develop a bill that works for everyone,” said Fred Nathan, executive director of Think New Mexico, a think tank that was a driving force behind the voter-approved proposal for an independent insurance regulator.

The group plans to offer regulatory legislation next year and intends to work with consumer groups and the insurance industry to try to develop a bipartisan measure.

As part of the federal health care law, Republican Gov. Susana Martinez’s administration is establishing a state-run insurance exchange that could allow as many as 250,000 uninsured New Mexicans to buy medical coverage between 2014 and 2020. The exchange will serve as an online marketplace where small businesses and uninsured individuals can shop for federally subsidized insurance from private companies.

The state also must decide whether to expand eligibility of Medicaid to potentially provide health care to nearly 170,000 low-income residents by 2020.

“This is going to be a huge jump in what we’re doing and how we’re insuring everybody,” said Insurance Superintendent John Franchini, who was selected by the PRC in 2010 to run the commission’s Insurance Division.

The regulator will oversee rates for health plans offered through the exchange just as it now approves the pricing of policies offered by insurance companies doing business in New Mexico.

“That’s our big responsibility to make sure the policies are fair, the coverages are there and the injured parties get the benefits that they deserve from the policies they paid for, and the insurance companies are financially strong enough that they have to be able to pay these claims,” Franchini said in a recent interview. “That’s not going to change when there is an exchange.”

He said the Insurance Division plans to speed up regulatory decision-making by completing its review of rates and insurance forms within 30 days after companies submit them to the agency. Currently, the regulator can take 60 days.

Franchini said he doesn’t want insurance regulation to create problems for the state in implementing provisions of the federal Affordable Care Act, which is to provide more protections to people who already have health insurance as well as expand access to those without medical coverage.

“Between 2014 and 2017, we’re going to have a lot of stress in the system. Through the market processes we can put in, at least we’ll take the regulatory stress off. We’re not going to be a stumbling block in the process,” said Franchini.

Topics Legislation Mexico New Mexico