Report from Santa Fe; Eric Serna

. . Report from Santa Fe is made possible in part by a grant from the members of the National Education Association of New Mexico. An organization of professionals who believe that investing in public education is an investment in our state's economic future. I'm Lorraine Mills, I'd like to welcome you to this week's edition of Report from Santa Fe. Our guest today is Eric Serna, the Commissioner of Insurance for the State of New Mexico. Thank you, Eric, for joining us. It's always good to be here. Well, you were inaugurated on my very birthday in 2001, I think it was February 20th. And we were so pleased that someone with your vast experience in this field would be in charge of all the insurance, kind of the thorniest issue for everyone. So tell us a little about your background and why validate why we knew it was so perfect to have you for insurance.

Lorraine, thank you for those kind comments. Well, I'm an Native New Mexico and I was brought up in Espanola, New Mexico. I went to the University of New Mexico. I'm also, I went to school at New Mexico Military Institute. So for all of you and me folks out there, I'm one of you. I then went on to law school in Washington DC at the Catholic University of America. Started my professional career in Washington working at the EEOC Equal Employment Opportunity Commission, where I worked my way up through the ranks. Then I went to work for United States Senator Joseph M. Montoya, who gave me a lot of opportunity to grow and to learn. Came back to New Mexico, where I was actually kind of recruited by the King administration. And he appointed me to his cabinet, one of his early terms. It was the youngest cabinet secretary at the time.

And you were a secretary of labor. Uh-huh. Then the governor, as you know, Governor King at that time, appointed me to fill out an unexpired term of Columbus Ferguson, who had become ill and couldn't continue an office. I had no idea I would ever run for any office, much less statewide the first time out. Well, I ran and I won and served on the old State Corporation Commission for 17 years, 14 years as its chair. Then, as you know, I ran for Congress and made a good run. I came up a little short. Then President Clinton at the time called me and asked me if I would be interested in serving in his administration. Of course, I told him I would be honored to do so and served as the regional director of the USDA. And then was recruited back to serve as the insurance superintendent for the state of New Mexico at a time, when there were a lot of volatile issues and some concern about the way the department was going.

I came in and I've been there for three years and we've done some great work and made some great strides. And I'm happy and honored to be serving the people of the state. There still are volatile issues and we'll get to them in a minute. But one of the things that Ernie and I were so proud of you for doing was the work with the Coen Alma Foundation. So please tell our viewers a little about that. I'm pleased to be able to talk about Coen Alma because as you know, Coen Alma means with Seoul, with spirit. Coen Alma is a private nonprofit foundation whose mission is to serve underserved areas, unmet health needs. Now, we were created three years ago as a result of a conversion when nonprofit Blue Cross Blue Shield sold to a profit corporation in Chicago. And it was a seamless transition.

We went through many public processes, got the input of the advocacy groups of attorneys. The attorney general, of course, worked as co-chair with me to ensure that it was done in an appropriate fashion, turned up with an excellent board and created this foundation that I am proud to say I am the president of, we have as our executive director, Robert Desiderio, who was the dean of the law school for many years and retired. So we snatched him and are very fortunate to have him. In the short three years, Lorena, we could talk about this for hours because it's my passion. But in the short three years, we have given out, well over a million hours, or first year, 660,000 in grants, second year, 770,000. This year, on November 19th, we will be giving out one million hours. We are 27 million strong and have had such a nice impact on so many communities throughout this state that have gone underrepresented and underserved in the health arena. And our focus is now, because we couldn't be all things to all people as kids.

So we are focusing our efforts to assist the young people in this state who need care. And we deal in non-traditional ways. New Mexico has this wonderful diversity and we deal with it in many ways. We deal with conundeadas. We deal with medicine men. And right now in the Native American community, they only have medicine men. One day, I hope they have medicine women as well, because they are better nurturers, and might have been in some of the men. But we are doing everything that we can to ensure that the wonderful diversity of the state is incorporated into our mission statement and into our goals and what we are all about. So I'm just pleased to give that good report on conundrum. For people whose interest has been peaked by your description of what you're doing, is there a website or a phone number? There's another website and it's Kunalma.org. So it's WWCOMALMA one word.

Oh, no wait, you're right. C-O-N-A-L-M-A.org. Okay, because it's wonderful and really unusual work and people, I think, should go there and find out more about it. On one thing, Lorraine, we are the only foundation in the country that has in its bylaws that we will have representation of the Native American community, the Pueblo Indian, the Mescalero Apache, and the Navajo. So we not only walk the talk, we not only speak the talk, we walk the talk, and we're very proud of that. Now let's go back to your insurance wearing, your insurance hat you wear. Probably nothing mirrors the confusions and the contradictions in our culture as the trends that are happening in insurance. And let's just look at some of the things we're going to look at. Of course, health insurance, automobile, furniture, motors, home and casualty, insurance, there are just so many areas.

So I'm going to let you just fill us in on what's going on that people really need to know about. Well, first of all, Lorraine, the insurance industry is a vibrant industry in New Mexico. It is four and a half billion dollars strong. That means jobs, it means infrastructure, it means a lot of payment of taxes. So I'm glad that we have a strong insurance industry in New Mexico. Now, a lot of your listening audience is probably saying, well, I pay too much for insurance. And you know what? I agree. We all pay too much for insurance. And there are a lot of reasons for that. And our department is there to talk to people and help people if they think they are being overcharged. Because there is a process. An insurance company cannot just automatically raise the rates. They do have to go through a process. And it is a hard market now.

And by that I mean it's very cyclical. Sometimes the insurance rates are lower than other times. What drives rates are many factors. Prescription drugs is a big driver of the high cost of health insurance, as hospital stays. Fraud is a big driving factor in all of insurance, whether it be health, property, casualty, life insurance. And we all pay. When an uninsured motorist is involved in an accident, you and I and those who have insurance that they pay, there are money on pay for that uninsured motorist. So it's in our best interest to get everybody insured and to eliminate the fraud. Now, 9-11 was a disastrous event in the history of the world and history of our country. That was the most expensive, costly disaster in this country in our history. That helped drive rates up.

Whenever there is a national disaster or hurricane, a mudslide in California that causes devastation and earthquake, we all pay for that. But we pay for it in a manner where it's a shared risk and it's a spread risk. It trickles down to New Mexico even though the events take place in New York or California. So we all pay, but it's our job at the department to make sure that we're not paying more than our fair share. And in this total scheme of things, New Mexico is about mid-range for property and casualty. We have the third lowest rate for medical malpractice. Now the doctors who are listening to this are going to say, by God I'm paying a lot in malpractice. I'm not saying they're low, I'm just saying they're the third lowest. There are other states that are in crisis, California for one. So when doctors do leave New Mexico, they don't leave because of the medical malpractice. They leave because they want a change in their lives or they want to make more money or there aren't enough people here.

But one factor in their leaving is sometimes the very low rate that New Mexico has of Medicare and Medicaid reimbursement, but that's not in your, that's a federal thing. Now we don't have jurisdiction over that. Right, that's federal. But you're right, but the one thing that I am proud of is that our rates are low when it comes to medical malpractice. And so a lot of doctors that leave, they come back. But doctors need to be allowed to be doctors. Too many doctors are having to be administrators. They're having to be businessmen and women. They're not allowed to treat their patients. You have a clerk in Idaho determining whether somebody who has an ache in their sight is covered in New Mexico. We got to do something about that. The whole HMO system at some time, maybe it had a good intention, but the consequences have not been as good in my opinion as they could be because we have made business men and women out of doctors that went to medical school. To serve people, to heal people, not to fill out form after form, so they would get 20% on that dollar that they are owed.

I'm so happy to hear you mention this because under the HMO system it gets so that a clerk with a high school education is making decisions about whether someone should have heart surgery or not. And I'm just happy to hear that you're working against that. And you know the crisis that we are facing in New Mexico has been faced throughout this country. In my opinion, the number one crisis in America today, it's not terrorism. That's a very important issue that we have to deal with. But it's not the number one issue in America today. If you listen to the news that is, the number one issue in America today, and as I feel it should be, is the affordability of health care and insurability of our people in New Mexico. We have one out of every four children in New Mexico is uninsured. We have 20% of our population, which is uninsured, which is too high.

We have people who are insured who have no access. We have people who have access who have no insurance. And in New Mexico, it's unique. We have areas that you are long distance between a clinic or a hospital and somebody's home. We have to come up with a scheme to allow for the affordability, the access of insurance for all of our people. Now Governor Bill Richardson, his credit, has taken on this task, which is controversial. It can't be dealt with in sound bites. It's difficult to deal with because it's not a popular issue because it is so complex. But the governor has taken his hits, but he has taken the issue on in this last legislative session, tried to do a lot to help the situation. He got some of what he wanted done, but others, you got your lobbyist, you have your various interest groups that are steadfast in what their position is, and they weren't willing to give.

Lorraine, until every stakeholder, I'm talking the insurance industry, I'm talking the HMOs, I'm talking the government, I'm talking the pharmaceuticals, management, I'm talking the pharmaceutical companies, until every interest group is able to come to a table, sit down and give something up for the good of all. Until we reach that point, we're going to continue in this vicious cycle of increasing costs and our insurance, the availability of insurance is going to continue to decrease, the affordability is going to decrease. We have to do what we did with the workers come 11 years ago, where we made the deal, we said we were going to stick with it, the governor, whether you liked it or not was going to sign it, the leadership in both houses agreed, and everybody was at the table. The workers come system that we have today is not perfect, but it's one of the best in the country, and need some tweaking now, grind.

And not everybody is protected to the extent they would like to be, but we're surviving, and there's broader protection than there is in other states, and we're not facing the crisis. But the number one crisis in America today is healthcare, and the lack of it in many instances, and we better start dealing with it, because the bubble has burst, and it's not going... We're not going to be able to put that toothpaste back in that bottle. And we're the only industrialized country that doesn't offer a minimum amount of healthcare to its citizens, which brings me to when people have discussions like this, I'm afraid to use the wrong... I don't want to use a buzzword, but the issue of single payer or universal healthcare comes out, because people will say, but we spend so much already, that we really could cover everyone. It's like the Medicare bill that passed nationally at 500 billion, by the time special interests were rewarded for all their things, and that donut was made so that seniors couldn't... You know, you had to have very specific qualifications to receive anything from that bill.

By the time you're spending that much money, you could actually buy all the drugs for everybody who needed them, without all the favors for the special interests. So just, in brief, how do you feel about single payer? Single payer universal healthcare lit. Okay, let's call it what it is. Is a buzzword that is anathema to any political individual who is involved politically who wants to continue in that office. So they say, I believe that we are 75% there. So we're equivalent about 20%, 25%. I don't care what you call it. There's going to have to be a partnership between government and the private sector. I think that even the insurance entities that are private sector concerned will tell you this, that they are at which ends. They work in a very slim profit margin, and there are more going under than prosperity.

We have our federal government that, in our federal legislators, who deal with this, that they never go quite far enough, because just when they're at the point where they're going to make some progress, there's an election cycle. There's a change. People campaign on issues of improving the system and helping with the costs associated with improving the system. And then they get into the office and reality sets in to stay in office. They have to switch their attitudes. Until we have federal legislators that go in and have the constitutional fortitude to stick with the program and stick with what they campaign on. And we get enough, a majority at least, in both houses, and a president that will sign the kind of legislation that needs to be signed. We're going to continue to be in crisis, and everybody's going to have to pay more than their fair cost, because you mentioned a wall of gold with the only industrialized nation in this country.

In the world. In the world, rather. And you know what? We pay more for health care than any other country in the world. And we get less. Yet we get less. And something's wrong when we're paying just to use an example in this hypothetical. But something's wrong when we're paying $20 for a pill in this country that you can get in Canada for $0.50, or in Mexico for $25, or in some other country. There's got to be some. Of course, the pharmaceuticals and the governor Richardson was right on when he said this. When you have pharmaceutical companies that invest $400 million in the re-election of congressional folks, you're not going to get much change in the law unless they say either I'm not going to accept that money, or I'm going to accept it, and I'm going to vote for what's right for the people.

And those rates that you are charging for those pharmaceutical drugs are too high. We're just not going to get there. It's a political reality that we're all going to have to face. Well, where are we going to get those politicians that can, you know, turn their cheek to the almighty dollar and say, but I really want to represent my people. I want to do what's best for the citizens of New Mexico or of America. Well, you continue to look at the leadership of Bill Richardson. I'm not here to promote Bill Richardson, but he did take the issue on this legislative setting. Jeff Bingham and has been a strong advocate and has put his efforts toward assisting. Senator Domenici has been helpful in that regard also. So, I mean, I think it's going to take the chairs of those powerful committees to receive most of the benefit from some of these contributions. To really just realize that the implications go far beyond an election cycle.

And as bad as shape as a lot of people think that we are in New Mexico, we are still in much better shape than many other states that are just... Or an disastrous deficit all over the place. So, you know, I mean, we are, but as a result of that, we can exert the kind of leadership and display the kind of leadership that is necessary to bring the rest of the country around because it's not going to go away. I mean, first lady at that time Hillary Clinton, Rotten Clinton, now Senator, at one point tried under the Clinton administration to revamp the whole system, but it got out of whack. You had too many special interests get in there and they removed the focus from the health care crisis to the special interests. And maybe the messenger wasn't the right one.

But the right idea was to discuss it and to bite the bullet. Had we done that 11 years ago? We might not be in the crisis that we are today. And it's not a partisan issue. It's not a partisan issue because adequate health care, good health care, it transcends political party, it transcends race, it transcends everything except economic status. If you have wealth, you get the best health care. That's true. We only have five minutes left. That's so quick. I know, but health care is my favorite issue. But there are some other things that we should touch on, automobile insurance and uninsured drivers, a home insurance and the fact that there's a national trend to exclude mold coverage and other big trends in the national insurance situation. Just give us a little thumbnail sketch of a couple of those. Well, one area where I think we're seeing some relief and we'll see relief is in the property casualty. I think rates may start to ease and maybe go down in some instances.

But what has driven some of these costs has also been the mold situation in Texas, which is multi-billion dollar problem. It has slowly reached into New Mexico. And the negative consequences of mold have had dire consequences even here in New Mexico, not to the extent that they have had it in Texas. But it's bad here in New Mexico and mold is a serious problem. The uninsured motorist problem is causing rates to continue to go up and in some instances skyrocket. The motor vehicle department is making an effort and we're working with them to inform individuals if they do not keep their insurance up. The registration will in fact be withdrawn. This administration under Bill Richardson has invested some resources that weren't invested before.

Because there's plenty of laws on the books. It's just there hasn't been the enforcement because there haven't been the resources. Now Secretary Danko and his law enforcement folks are starting to work closely with NBD, the insurance department, and we're making some progress. It's just going to take some time. And some databases that are interconnected so that you can find out who is delinquent. That's correct. And then lean on them a little bit to get their insurance. A national trend that I've read about is trend toward federalizing insurance regulations. That would be disastrous for this country, but it would be especially disastrous for small states. What the effort is is to the insurance industry, not all of them, but some of the biggies, are pushing the Congress to institute a federal preemption of state regulation of insurance regulation. What that would mean is that instead of you or somebody from Kuyimongay,

Kallieneri, certain of the superintendent to display their displeasure with their carrier or file a complaint, they would have to call a 1-800 number in Washington DC. You go through a menu system of two choices. Good luck. You know, we had many scandals the last few years in corporate America. Many pensions were lost. People's livelihoods went the way of the stock market, which was in the toilet. You had Enron, you had global crossings, you had even Quest. With all of the shenanigans that were exposed, you didn't have one major insurance company that was exposed the way these other companies were. Why is that? Because of the heavy state regulation and the accounting principles that we require, which are layered, and you can't do this funny... Enron, they're keeping accounting that they didn't got away with.

That's the best argument to keep state regulation. But if that argument doesn't hold water with some of these folks and some of the listening audience, I had to think about how difficult it would be to file, not only get some relief in a claim when it's filed, but if they had a serious problem, the relief and the paperwork that it would require to go to a federal agency that would be ill-funded, inexperienced staff, it would take decades to get up to where most state departments are. Plus, we collect in New Mexico alone about $130 million in premium tax that we would lose. It would go to the federal government. Now, the federal government, they spend enough of our money with what they collect from us. Let's keep what taxes we can here in New Mexico and let the legislature appropriate that money for the important programs that we have in New Mexico to help our kids, to help our seniors, and to help New Mexico.

Eric, thank you so much. I'm so pleased to have your hand on the helm of the insurance ship of state because your heart is so clearly with the people and helping the state handle these treacherous and difficult, and as you pointed out earlier, volatile issues of insurance. Well, I appreciate that, and we'll continue to do that, but we've got to keep the regulation at the state level. Well, thank you very much. Our guest today is Eric Serna, the superintendent of insurance for the state of New Mexico. And I'm Lorraine Mills. I'd like to thank you for being with us today on report from Santa Fe. Report from Santa Fe is made possible in part by a grant from the members of the National Education Association of New Mexico. An organization of professionals who believe that investing in public education is an investment in our state's economic future. You