Regulating Health Insurance in New Mexico

While most of the attention during New Mexico’s recently-completed legislative session was on Governor Richardson’s massive, government-managed health care proposal, apparently it wasn’t the only health care reform considered during the session. In fact, Richardson just signed a new law that further regulates health insurance.
One provision in the law will make it more difficult for insurance companies to rescind coverage for people who develop serious medical conditions.
The cap on yearly medical services paid by health insurance policies offering certain minimum coverage also will increase from $50,000 to $100,000 under the new law. The higher limit starts next year.
Currently, an insurer can refuse to pay claims or rescind coverage if there were omissions or misstatements—sometimes even if inadvertent—about a person’s medical condition or medical history in an insurance application.
That standard will change under the new law. Once a policy takes effect, insurers can deny claims or end coverage only if they show that an individual made “willful or fraudulent misstatements” in their application about a pre-existing medical condition.
Another change in the new law is to give people more time to obtain medical insurance after they lost coverage. It increases from 63 days to 95 days the “creditable coverage” period. That’s the time in which a person without coverage receives credit for previously being insured.
While all of these policy matters may sound reasonable to the average citizen, each of these new regulations will further increase the cost of health insurance in New Mexico. Considering that Richardson is simultaneously working to mandate “universal coverage,” it might seem odd that he would sign legislation to make insurance more costly. Unfortunately, it is perfectly consistent because the tendency is towards greater government involvement in all areas of health care.

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