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Medicaid cost jump threatens state budget

Copyright © 2017 Albuquerque Journal

Rep. Patricia Lundstrom, D-Gallup

Rep. Patricia Lundstrom, D-Gallup

SANTA FE – New Mexico faces about $82 million in extra Medicaid costs next year – far outpacing the amount of new revenue expected to be available.

The extra costs are possible partly because Congress has not reauthorized funding for the Children’s Health Insurance Program, or CHIP.

It would cost the state about $31 million to cover those children, although there’s still a chance the federal government will renew CHIP funding. And the state may not have the option of letting coverage lapse for those children – not that it would want to – said Brent Earnest, secretary of the state Human Services Department.

Even if the federal money for CHIP were approved, however, the state’s tab for Medicaid would climb about $50 million, or twice the projected amount of “new money” available in the whole $6.1 billion operating budget.

“We’re going to keep our fingers crossed” for congressional action, said state Rep. Patricia Lundstrom, a Gallup Democrat and chairwoman of the Legislative Finance Committee.

The state now spends about $916 million a year on Medicaid, including CHIP. That figure would climb to about $966 million if Congress renewed funding for CHIP, or about $997 million if Congress didn’t.

The cost estimates surfaced Wednesday as dozens of lawmakers gathered at the Capitol for presentations ahead of the January legislative session.

The state is headed into a thin budget year. An economic forecast released in August estimated New Mexico would have only about $25 million in revenue next year beyond this year’s spending levels, allowing for the state’s $6.1 billion operating budget to grow less than half a percentage point.

The new budget year starts July 1.

The growing Medicaid costs threaten to consume all the new money and then some.

Much of the extra $82 million needed for Medicaid is outside New Mexico’s control, Earnest said.

A little over $31 million is necessary for the children’s health insurance program, unless Congress reauthorizes it.

Nearly $15 million in new costs are a result of the federal government slowly shifting more of the cost of the Medicaid expansion – in which 31 states agreed to cover more low-income adults under the Affordable Care Act – back to the states.

And the rest of the extra budget request includes a projected increase in the number of people enrolling in Medicaid, inflation in the cost of medical services and a few other adjustments.

Lundstrom, the LFC chairwoman, said she believes the state Human Services Department has done a reasonably good job limiting the costs it can.

“I’m pretty pleased,” she said after the presentation. “They’re really talking about cost control, which is good.”

Rep. Larry Larrañaga, R-Albuquerque, warned Earnest that the Legislature may not find enough money for the requested $82 million increase.

“I continue to have concerns about this,” he said.

The state is seeking federal approval to make a variety of changes to its Medicaid program, but the changes are not expected to happen in time to affect next year’s budget.


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