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February 2010 St@teside

New Mexico Passes Medical Loss Ratio and Gender Rating Legislation

News of soaring individual market premiums captured the attention of policymakers recently, particularly with the release of Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System by the U.S. Department of Health and Human Services. The report highlighted rate filings in states that called for premium increases ranging from 15 to 40 percent. 

States across the country have been considering ways to prevent premium increases that are well above the consumer price index for medical services (see also next article on Massachusetts). The New Mexico legislature has passed two bills that seek to mitigate the problem of high and rising premiums. House Bill 12sets a minimum medical loss ratio (MLR) for the state and Senate Bill 148phases out gender rating.

House Bill 12 requires that at least 85 percent of premiums for health maintenance organizations and nonprofit policies in the small group market be used for direct services reimbursement.  The Superintendent of Insurance will establish an MLR for the individual market that cannot be under 75 percent. The legislation narrowly defines “direct services,” and it applies across all product lines of a given company. According to a February 2009 report from Families USA, 13 states currently have MLR requirements in the individual market and 13 in the small group market. New Mexico’s requirements are some of the strongest in the country.

Senate Bill 148 leads the way to the prohibition of gender rating in New Mexico, phasing out the allowed differential between policies for men and women. Currently individual rates in the state can be up to 20 percent more for women. New Mexico joins eleven other states that currently prohibit or restrict gender rating in the individual market. These include Maine, Massachusetts, Minnesota, Montana, New Hampshire, New Jersey, New York, North Dakota, Oregon, Vermont, and Washington.