News in brief - Apr 25, 2011

New Mexico tightens rules on health insurance rate hikes - Medical inflation low

New Mexico tightens rules on health insurance rate hikes

Effective January 2012, health insurers doing business in New Mexico must provide more detailed justification for premium increases to the state's insurance commissioner. They also have to provide a detailed disclosure to customers who would be affected by the hikes.

The new rules require insurers to list expected and past medical-loss ratios, whether the insurer has stopped selling policies for the affected block of business and how much money the plan holds in reserve.

New Mexico Gov. Susana Martinez signed the rules into law on April 7.

State law already gave the state insurance commissioner authority to block health insurance rate increases. As of December 2010, 16 states do not require state review or approval for health insurance rate increases, according to the Kaiser Family Foundation.

The Patient Protection and Affordable Care Act gives the federal government the authority to intervene in the case of "unreasonable" increases.

The New Mexico Medical Society did not take a position on the bill.

Medical inflation low

In the past few months, growth in the cost of medical care has been lower than overall inflation. But the annual rate of increase was still comparable.

The consumer price index report released April 15 by the U.S. Bureau of Labor Statistics found that overall inflation was 0.5% for March. This number was 0.5% in February and 0.4% in January.

The cost of medical care increased by 0.2% in March and 0.4% in February. The growth was only 0.1% in January. Prices paid for professional services, a category that includes physicians, grew by 0.2% in March, but 0.5% in February. It remained stable in January.

Despite these monthly numbers, annual inflation for these categories was on track to match overall inflation. For the past 12 months that number was 2.7% -- as was price growth for medical care and professional health services.

The latest CPI report is online (www.bls.gov/news.release/cpi.nr0.htm).