Is this interesting approach to funding health care in New Mexico going to spread across the country? Interesting question, and one that may have a qualified ‘yes’ attached to it. Although, as with everything new, it remains to be seen how it will actually work in the field rather than in theory.
New Mexico has this rather innovative new approach to funding health care (Bill HB 12), that will go into effect in 2011. Essentially, it mandates all insurers to cough up at least 85% of every premium dollar for health care services. While this isn’t making too many health insurance companies really happy, it seems to have been met with a seal of approval by the public who has to pay the premiums.
For health insurance companies that don’t hand over 85% reimbursement requirement, they will find themselves paying out a credit or dividend on future premiums to “all” policyholders. This would also need to be in an amount that would eliminate any shortfall.
People on Medicare don’t need to worry too much about this new bill, as it likely, at least on first glance, won’t affect them. The intention of this particular bill is to “not” have it apply to Medicare long-term care or disability, hospital indemnity, accidents, dental, vision and disease specific coverage. It is also not intended to apply to individual underwritten health insurance policies, plans, limited benefit plans and contracts that act as supplements to major medical coverage.
While this may seem confusing, it may make some sense in the long run for the “greening” of health care services and may offer some potential income to other states bold enough to give this new approach a try.
One thing to remember is that with the still “forever and ever pending” Health Care Reform Bill, one of the items in it outlines that Congress would set spending requirements. That means that the bill in the House and the Senate would compel insurers to spend a much larger portion of their premium income on care for their customers. A welcome idea to say the least. This would in turn reduce the amount of money the big health insurance companies have on hand for sales, admin, profits and let’s not forget executive salaries.
Imagine having more money spent on the care of health insurance customers. What a difference that would make to just about every American. Whether or not there are similar plans in store for Medicare, it’s not certain. What is certain is that the Senate bill dictates 80% to be spent on medical care and “quality improvements,” while the House bill says 85%. What’s the current average? Evidently the current average tends to range from the low 80 to 87 cents on every dollar. Hopefully the new Health Reform Bill will make things clearer and get things sorted out and our health care system back on track.
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