Medicaid Meltdown

New Mexico's Medicaid program will probably get more expensive, but federal health care is the wild card

Very few people outside a small circle of Republicans seem to know what's really happening with healthcare at the federal level. There’s bipartisan unease over the secrecy of it all, and some senators have recently said publicly that there’s no concrete bill yet, just “ideas”—even though they’re expected to vote on it in just a few weeks. 

But a core demand among Republicans who want to repeal Obamacare (formally the Affordable Care Act) has been a reduction in federal dollars that are currently aimed at boosting the number of insured low-income people. That plan's adoption would have a major effect in New Mexico, which still has one of the country’s highest number of uninsured despite improvements in recent years. 

While insurance companies have dropped out of the exchange markets in other states, New Mexicans still have a relatively high number of insurers available to them through Obamacare, which expanded the Medicaid program here. There are now about 900,000 New Mexicans insured Medicaid, which is financed by both the state and the federal government.

“The state comes up with matching funds through its budget and then the federal government will match that at a certain percentage based on the poverty rate within the state,” says Abuko Estrada, a staff attorney at the New Mexico Center on Law and Poverty. “And because New Mexico has one of the highest poverty rates in the country, we also have one of the most generous match rates [at] about a four-to-one match rate right now.”

Either version of the proposal that has passed the House and is before the Senate would almost certainly end Medicaid expansion in New Mexico, potentially reducing the number of insured people by the hundreds of thousands. More than 260,000 people have gained health insurance through Medicaid since 2014.

“We can certainly speak for New Mexico, we are not looking forward to seeing those big cuts become reality,” says state Sen. Nancy Rodriguez, D-Santa Fe, in reference to the federal bill. “We will continue to see the most vulnerable, needy, multiply-impaired individuals, very negatively impacted if this happens. We’re watching very carefully.”

Even without the threat to Medicaid expansion from DC, New Mexico is expecting a $32 million shortfall in its fund for the state Medicaid program, known as Centennial Care, after December 2018. The Human Services Department is considering measures like raising premiums for people who aren’t hugging the poverty line and eliminating coverage that pays for medical bills for three months prior to signing up for insurance. 

At a meeting of the Legislative Health and Human Services Committee on Friday at the state Capitol, Medicaid Division Director Nancy Smith-Leslie said the department had also considered doing more frequent checks of Medicaid-covered patients’ income, but backed off after public backlash. In addition, she said they nixed a proposal to drop the number of people covered for Hepatitis C (they’re crossing their fingers that the price of the drugs drops), but even with everything else they would still have a shortfall and need supplemental funds in 2018.

“If some of these other actions don’t occur [to reduce costs] we will be in a bigger pickle,” Brent Earnest, department secretary, said at the hearing. It requires more “short term solutions” for balancing the Medicaid budget, which he said meant three things: Provider’s rights reductions, reductions to benefits, and short term changes to eligibility. 

A draft of the updated Centennial Care plan to be implemented January 2019 will be ready by September 1, Earnest said. The federal Centers for Medicaid and Medicare services is expected to approve the program. There are public hearings throughout June in Silver City on Monday, Farmington (21), Roswell (26) and a tribal consultation in Albuquerque on June 23.

But even Earnest acknowledged that a sharp reversal of Medicaid at the federal level would throw its state counterpart into disarray. Less money from DC “would really change the structure of the program.”

Once the legislators began questioning department officials, Rep. Miguel Garcia, D-Albuquerque, immediately named the elephant in the room.

“What does the human services department propose to do if the federal government removes the current federal medical assistance percentage matching funds, and replaces those with block grants?”

Secretary Earnest’s response wasn’t reassuring.

“I don’t have an answer for that,” Earnest said. “I think what we are certainly watching is, you have two big changes: One is [the Trump administration’s] proposed budget, which over a number of years takes money out of the Medicaid program nationally, and [two is] the changes in the American Health Care Act, which also significantly changes financing for Medicaid. 

So it’s a double whammy concern for Medicaid and where it ends up.”

Editor's note: An original draft of this story said that the state was expecting a $915 million shortfall this year. That is the number budgeted to the human services department for the upcoming fiscal year, not the amount of the shortfall, which is $32 million. We regret the error. 

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