Florida Health Insurance Topic:
"Health care in New Mexico vs. Florida"

Health Insurance (NM)

Today, the country's health-care system has become the subject of major debate in Washington. One important consideration is the creation of a public option to increase access and competition and drive down rates. In this debate, the federal government should consider how New Mexico solved part of its problem with workers' compensation insurance 20 years ago by creating a nonprofit private insurance company run by a board of directors, the majority of which are publicly appointed.

The New Mexico State Legislature enacted sweeping workers' compensation reform during a special session in 1990. Among the changes was the creation of the Employers Mutual Company (now known as New Mexico Mutual) to offer competitively priced workers' compensation insurance. The company was set up as an independent public corporation to operate like any other insurance company, subject to the same rules, regulations and assessments.

At the center of the national debate over a public option is the question of cost, who will pay for it and is this a move toward the socialization of health insurance and the delivery of health-care services.

Those in opposition to the creation of a public option are the same groups who opposed the creation of New Mexico Mutual, most notably the insurance industry who would have to compete with the newly formed company and almost every segment of the health-care industry who fear their payments would be leveraged downward through the bargaining power of a large pool of consumers. It can be argued that such opposition alone lends credence to the formation of this option.

Start-up funding for New Mexico Mutual was a $1 million appropriation from the state that was paid back in less than two years with interest. The company was also authorized to issue revenue bonds, and $10 million in revenue bonds were issued to capitalize the company to be repaid over an 8-year period. The bonds were repaid two years ahead of schedule. In all, the company paid the state more than $5 million in interest and has been debt-free ever since.

The company is not a state agency and does not receive a state appropriation. Very simply stated, New Mexico Mutual was created by the government, at no cost to the government or the taxpayer, to help solve a social and economic problem and has been a tremendous success.

Through similar action, Congress should enact legislation to create a national health insurance company as a nonprofit, independent public corporation. The company should be a stand-alone company, not a federal agency, under the management of a board of directors appointed by the president with the advice and consent of the Senate to assure public accountability. There are a number of highly qualified professional men and women who could serve on such a board with vast experience in the field of insurance and investment from whom to choose. The company would have to be licensed in each state and would be subject to the same rules, regulations and assessments and would operate like any other insurance company in each jurisdiction.

The purpose of this private/public partnership would be to increase competition and reduce the growth of health insurance cost over the long term through providing a variety of health insurance products for groups and individuals and negotiating fair and reasonable payment for health-care services. Products would be available through any properly licensed insurance agent or other employer purchasing group. The company would guarantee choice of doctors, invest in prevention and wellness, encourage patient involvement and end barriers to coverage for people with pre-existing medical conditions, thus ensuring that every American has an option available to insure them and their families and receive the health care they need and deserve.

Start-up funding, and start-up funding only, would have to be provided through seed money from the federal government to be paid back in two years with interest. Initial capitalization to meet insurance industry regulatory requirements should come through an authorization from the federal government to issue revenue bonds with a definite timeframe to be repaid from premiums raised through the issuance of health insurance policies and from other revenues of the company. Through this mechanism, the company would have to survive on its own based on good business judgment, actuarially sound underwriting and pricing practices and aggressive case management and utilization review of medical costs.

In New Mexico, as a result of the 1990 work comp reform, work comp rates are still 50 percent less than what they were at the time the legislation was passed while maintaining excellent benefits to injured workers. And New Mexico Mutual has played an important role in controlling rates by providing competitively priced products and establishing industry standards for sound loss control programs, safety incentives, utilization review of medical costs and total claims case management. The creation of New Mexico Mutual was truly a win-win for employers and workers. Other insurance carriers who compete with New Mexico Mutual for market share undoubtedly do not share this belief - but so much more to the point.

The creation of a public option as described above is essentially a mirror image of New Mexico Mutual. And, like New Mexico Mutual, at the end of the day such a company would have the effect of reducing rates, reducing health-care costs, and being available to businesses and individuals through the market of their choice, all at no cost to the taxpayer. Nothing is being socialized, private business and the importance of private business as the economic driver of our economy would not be threatened. In fact to the contrary, such a public/private partnership would become part of the business community and in fact serve a valuable purpose to both businesses and individuals by offering an alternative to the purchase of health insurance in an open competitive marketplace.

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