Medicare and disabled Medicaid beneficiaries keep their current coverage, as well as military personnel. Homeless persons and illegal immigrants for whom no income taxes or employer contributions are collected, stay covered through emergency rooms and safety net programs. Federal employees, retiree health coverage beneficiaries, American Indian nations and other special cases may require further study. New insurance choices are offered to all other New Mexico residents under 65. Workers can keep employer-sponsored health benefits without modification, if they wish; but everyone must have coverage.

The Alliance, a statewide coordinating entity similar to a corporate benefits office, selects 4 or 5 private insurance carriers based on price and quality criteria, to offer a few easy-to-compare medical and behavioral health plans.

For example, buyers can either select a government employee-like benefit package, with a choice of three co-insurance levels and optional expanded benefits; or a less expensive pared-down benefit plan. Plans must comply with federal and state regulations, and allow participants to open a tax-free Health Savings Account unless a no-deductible option is selected. There may be other requirements such as free prevention, advertising limits, statistical reporting, wellness incentives, and in-state personnel. Dental, vision and other insurance can be purchased separately.

Alliance plans have community rating and guaranteed issue: buyers cannot be rejected, and premiums cannot be raised because of an individual’s age, gender, employer or medical history. Alliance carriers use mutually agreed financial risk adjustment mechanisms instead of risk-based premiums.

a. Community commitments to special populations. All children get a voucher for a fairly comprehensive benefit package. Low-income adults are eligible for reduced cost sharing, either through Medicaid eligibility, a subsidized upgrade to a no-deductible plan, and/or a co-insurance reimbursement program. Community benefits also include some Medicaid-funded assistance services which are not covered by Alliance plans, and the healthcare safety net. These benefits are best funded through Medicaid, healthcare-related state savings, and state income taxes.

b. Core benefits are a shared responsibility of individuals and their employers. Workers have choices: taking up an employer-sponsored group plan (if offered), buying an Alliance plan through an employer’s cafeteria-style benefit plan, going directly to the Alliance to buy a plan using a tax-funded voucher, or doing nothing. In the first two cases, the employer is presumably offering better benefits than the voucher, and does not have to pay any tax. In the last two cases, the employer owes a Health Coverage Contribution tax for that employee.

The Health Coverage Contribution is a certain dollar amount per employe per hour, which can be tiered by company size, which for a full-time employee approximates the cost of the cheapest Alliance premium. A portion of the tax may optionally be passed on to the employee to mirror employee shares of premiums. Collected contributions fund insurance vouchers for workers who cannot or prefer not to obtain health insurance through their employer. If those workers seek coverage through the Alliance, the voucher is credited towards their premium; if they take no action, they may be enrolled automatically in a core- benefit plan. Unemployed individuals lose eligibility for vouchers after a time, but they may still qualify for low-income subsidies.

c. Premium supplements to select a more comprehensive plan are a consumer responsibility, although employers can choose to pay for them to augment their employees’ compensation. Workers with cafeteria benefits can pay for the Alliance plans of their choice using a mix of employer contributions and their own dollars, free of payroll and income taxes. Individuals buying directly from the Alliance pay voluntary premium supplements to bridge the gap between their voucher and their chosen plan’s premium, which is income tax deductible. Individuals and employers can also put tax-free money in personal Health Savings Accounts (except when choosing a no-deductible plan).

The Alliance facilitates a few administrative functions. It coordinates the publication of standardized plan brochures and handles member enrollment by providing phone, web and mail-based assistance to consumers. It processes Medicaid and low-income assistance applications. It helps employers set up cafeteria benefit plans and provides them with consolidated monthly statements. It provides consumer information on quality measures, grievance procedures and the like.

Because it has enrollment data, the Alliance can be an effective information technology hub for insurance eligibility verification. It can develop new streamlined processes for pre-authorizations and claims. It may be well-placed to gather real-time public health monitoring data. It could even facilitate limited electronic health records for patients willing to share data with authorized providers, which could prevent medical errors and duplication of services. Another suggestion subject to further study would be for carriers to collect patient co-insurance when applicable, rather than healthcare providers.

The Alliance can also be tasked to give employers education materials and perhaps financial incentives to establish workplace wellness programs, which can significantly reduce health costs and improve productivity.

Note: the Alliance is an evolution of NMHIA, but it is not assumed that the organization would be used as is (the best governance model is to be determined).

This proposal does not require federal intervention, is non-disruptive and carefully balanced so that changes benefit most individuals, businesses, state and local governments, and providers in our state. With your help, New Mexico Health Choices can really happen!

The proposal is subject to change. We are always looking for expert review and everyone’s input. This is v.2.1

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