New Mexico sees stark financial choices in health overhaul

Stark choices lie ahead for New Mexico about which residents continue to receive Medicaid coverage and to what extent if congressional Republicans enact a plan to overhaul Barack Obama’s Affordable Care Act, according to first detailed analysis from the state with the nation’s second-highest poverty rate.

Maintaining expanded Medicaid health care coverage for low-income adults in New Mexico could cost state government up to $140 million a year, as federal matching funds are reduced for new or returning Medicaid enrollees, according to the briefing from the state Legislature’s year-round budget office.

Other points of concern include changes to minimum federal eligibility guidelines for children on and how new caps on per-capita Medicaid spending will affect a growing population of nursing home residents and disabled and elderly-care patients. Medicaid enrollment in New Mexico has swelled beyond 40 percent of the population under Obama’s signature health law.

The memo was released to The Associated Press on Wednesday after being circulated among state lawmakers. Congress was moving toward an expected vote Thursday on legislation undoing much of the law that has provided coverage to some 20 million Americans.

New Mexico is one of the 31 states that expanded coverage under the Affordable Care Act to adults with incomes up to 138 percent of the federal poverty level. The state’s uninsured rate has been cut in half since 2013 under the expansion.

GOP Gov. Susana Martinez approved the expansion but now favors a repeal of the Affordable Care Act. Eyes were fixed this week on the state’s sole Republican on Capitol Hill, Rep. Steve Pearce, who said he was studying revisions to the GOP plan before the scheduled House vote.

“Concerns still remain regarding affordability for consumers in New Mexico,” Pearce spokeswoman Keeley Christensen said in an email.

Jenny Felmley, a program evaluator for the Legislative Finance Committee who wrote the bill analysis, said New Mexico will have something of a cushion as the federal government continues to pick up at least 90 percent of costs for people currently covered under the Medicaid expansion through the end of 2019. Nearly 275,000 state residents are currently covered under the expansion.

But starting in 2020, per-person costs to the state will increase substantially – from $457 annually to $1,227 – for new enrollees and people who drop off Medicaid and then return. That could increase state general fund obligations by as much as $140 million annually, the report stated.

The analysis incorporated principles the nonpartisan Congressional Budget Office’s review of the GOP plan, which found 24 million people nationwide would lose their health insurance over a decade, while the bill would also reduce the federal deficit. Neither report takes into consideration revisions this week to the bill.

Felmley noted that New Mexico would gain a wide array of choices about who is covered under Medicaid and to what extent. But that freedom is likely to come with some excruciating choices as open-ended federal financing comes to an end.

Starting with the 2020 budget year, each state would receive a limited, per-beneficiary amount of Medicaid funding based on enrollment and costs. Federal payments would be increased according to a measure of medical inflation.

If costs grow more rapidly than that inflation index – as the Congressional Budget Office suggests they will – New Mexico would pay more for basic services and have less money to support Medicaid spending at lone hospitals in remote areas.

Felmley warned that costs for care among the elderly and disabled in particular are likely to outpace the inflation adjustments, at the same time that the proportion of people over 65 is growing.

New Mexico state government already is struggling to maintain its share of Medicaid funding – though it receives about $4 from the federal government for every dollar spent – because of a downturn in tax revenues linked to oil prices, a sluggish economy and the nation’s highest unemployment rate.

Under legislation enacted last year, the state has cut reimbursement rates to Medicaid providers and is pursuing federal permission to charge co-payments.

Sireesha Manne, a supervising attorney at the New Mexico Center on Law and Poverty, said changes to federal funding for the state’s Medicaid expansion are the most significant public policy concern.

“Over time the impact is that the federal support declines dramatically,” she said.