Medicaid edges out political agendas in New Mexico
SANTA FE — Rising health care costs linked to the expansion of Medicaid in New Mexico combined with faltering state revenues are crowding out initiatives sought by Gov. Susana Martinez.
In January 2013, Martinez became only the second Republican governor to break ranks with GOP allies and expand Medicaid. Three years later — well into her second term — Medicaid looms over nearly every spending decision.
“You have to slice the pie a little thinner for the rest of the priorities,” said Rep. Larry Larranaga, R-Albuquerque, chairman of the House Appropriations and Finance Committee. “Medicaid has become the big elephant in the room.”
New Mexico’s budget crunch is linked to a downturn in energy markets. It highlights the effects of Medicaid expansion as states start having to pay a portion of the costs for the newly insured, starting with 5 percent next year and increasing to 10 percent by 2020.
More than a dozen states that opted to expand Medicaid have seen enrollments surge beyond projections, straining their budgets. Few states have as much of a challenge in meeting new spending obligations as New Mexico.
Full Medicaid coverage now extends to 748,000 adults and children — about 36 percent of New Mexico’s 2.1 million residents, according to the state Human Service Department. The Affordable Care Act allowed states to extend coverage to childless adults with earnings of up to 138 percent of the poverty line, or about $16,250 for individuals.
State economists last week slashed revenue estimates for the coming fiscal year by $200 million due to declining royalties and taxes on oil production. That left just $30 million in new money above this year’s $6.3 billion state budget, while lawmakers scramble to cover a $78 million increase in Medicaid funding needs related to new and old insurance provisions.
That equation is squeezing policy priorities Martinez outlined two weeks ago in her State of the State address, including attacking crime with tougher sentencing provisions, improved databases and increased pay for certain law enforcement.
Limited revenues also put funding in question for many of the governor’s educational initiatives, including a planned expansion of early childhood learning.
Larranaga’s Democratic counterpart in the Senate, John Arthur Smith of Deming, said Medicaid obligations will leave little for new initiatives, unless taxes are raised.
“When you look at the governor’s State of the State address, it deflates some of those wishes,” the Legislative Finance Committee chairman said. “You can be tougher and harder on crime than anybody else, but ultimately it’s the taxpayer who has to pick up the bill.”
Annual Medicaid demands on New Mexico’s general fund are expected to increase from roughly $900 million last year to more than $1.2 billion by 2020.
Roughly 230,000 additional adults signed up for Medicaid under the expansion rules, and the publicity blitz and streamlined procedures drew in many more who qualified under other provisions.
Neither the governor nor Democrats are turning their back on the Medicaid expansion, even as election year battle lines are drawn over lightning-rod issues of immigrant driver’s licenses, violent crime and school performance.
Economists say the influx of federal Medicaid money has turned the state’s health sector into a bright spot on a lackluster economy, and provides additional state tax revenues that can be hard to quantify.
Of the $7.4 billion in annual federal funding the state receives, Medicaid accounts for $4.5 billion.
“If the federal government makes good on the promise they made — that the state contribution is capped at 10 percent — I think for New Mexico, that is clearly a good deal,” said Lee Reynis, an economist and former director of the University of New Mexico Bureau of Business & Economic Research. Reynis tracks and forecasts costs and savings associated with Medicaid.
“One would hope that as the economy improves, people will no longer be eligible and will not need to be on this program,” Reynis said.
For now, Medicaid enrollment rates reflect the state’s lingering economic problems.
New Mexico’s December unemployment rate of 6.7 percent was the nation’s highest. Its average per-capita income, $35,600, is 81 percent of the national average.
New Mexico expects Medicaid enrollment to expand by June 2017 to 38 percent of the population. About 13 percent of residents remain uninsured.
Thomas Maestas, 39, qualified for Medicaid under the expansion after completing a graduate degree in December. The Albuquerque man relies on the insurance for physical therapy for his knee and unrelated prescriptions as he looks for a full-time job.
Maestas works part time as a consultant and believes that without Medicaid, he would struggle to pay for insurance.
“I’ve lived many years of my life without health insurance,” he said. “Some people cannot afford it.”
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