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Gov. Commits To Medicaid Expansion

The state of New Mexico will accept what could be as much as $6.2 billion from the federal government between 2014 and 2020 to expand Medicaid coverage to an estimated 170,000 adults, Gov. Susana Martinez announced Wednesday.

“Access to health insurance has the potential to improve the well being of our families so our kids can learn better in school and so mom and dad can be better parents and more productive employees,” she said.

Martinez said the state cost of expanding Medicaid, which could be $74.3 million in 2020, will be partially offset by increased tax collections from insurance companies that run the state’s Medicaid program and by eliminating spending on state health coverage programs Medicaid expansion will replace.

New Mexico is “highly unique” among the states in its ability to improve its revenue picture by accepting the federal expansion money, Martinez said, speaking at the 20th annual Children’s Law Institute event at Hotel Albuquerque.

“It does appear to be clear that expanding Medicaid would not jeopardize the state’s long-term budget outlook,” the governor said. “We will not only save money each year, but can expect revenue increases, and that will offset the cost of providing these services in the future.”

Medicaid is a decades-old program that provides health care coverage primarily for low-income children, disabled adults and the elderly. In most states, including New Mexico, very few able-bodied low-income adults of working age receive Medicaid benefits.

Serving 560,000 now

About 560,000 New Mexicans receive Medicaid benefits today. While the federal government pays about 70 percent of the total cost, the state’s share is about $940 million.

The federal Affordable Care Act, also known as Obamacare, was designed to provide all Americans with health care coverage through a variety of mechanisms, including a requirement that states expand Medicaid benefits to adults earning 138 percent of the federal poverty level, or about $15,415 a year for a single adult.

The U.S. Supreme Court last summer ruled the government couldn’t require states to expand Medicaid but states could voluntarily accept the money. Martinez has been weighing the pros and cons of expansion since then.

She is unique among Republican governors, 10 of whom have already told the federal Health and Human Services Department they will not expand Medicaid.

Martinez, a first-term governor, said in a Journal interview that the fact the state budget will benefit from the Medicaid expansion, at least in the short term, was a key part of her decision.

“I may be a Republican, but I make decisions based on what’s best for New Mexicans,” Martinez said. “I make my decisions based on the numbers, and I’ve got to make sure we’re not cutting back $400 million or $500 million from education to make Medicaid work under the expansion.”

A federal promise

In her speech, Martinez warned that a “heavily indebted” federal government has promised to pay the entire cost of Medicaid expansion from 2014 through 2016, then taper off its spending until 2020 when Uncle Sam has promised to pay 90 percent of the cost in perpetuity.

“If the federal government breaks its funding promise and begins to cut the reimbursement rate for Medicaid expansion, our state budget quickly goes into the red,” she said. “The margin is very, very thin.” The state will cut support for adults covered by the expansion rather than cut programs for children in that event.

“I will not allow New Mexico’s kids to be kicked off of our Medicaid rolls because the federal government can’t keep a promise,” Martinez said.

State Human Services Department Secretary Sidonie Squier said after the governor’s speech that the state is required to begin enrolling new beneficiaries in October. Their benefits will begin Jan. 1, 2014. Like all Medicaid recipients, the newly eligible adults will be enrolled in one of the managed care plans run by commercial insurers with a state contract. They will have to demonstrate their income and assets are low enough to make them eligible for Medicaid.

Lauding the decision

Health care providers, advocates for the poor and insurers were universally pleased with the decision.

“This really is a whole new world for access to health care in our state,” said Kim Posich, executive director of the New Mexico Center on Law and Poverty. “For the first time ever, the amount of money you make will not determine whether you have health insurance. Tens of thousands of New Mexicans will be able to get health insurance who have never had it before.”

“This speaks well of the state’s commitment to improve the qualify of life in New Mexico,” said Lovelace Health System CEO Ron Stern. “We can improve the quality and longevity of life by adding insurance coverage to these individuals. It’s a very good decision by the governor.”

“The linkage between more coverage and better health has been well studied and documented,” said Presbyterian Healthcare Services CEO Jim Hinton. “This will ultimately result in a healthier New Mexico.”

He said that over time the rate of increase in insurance premiums should slow because people with insurance will no longer have to bear the cost of caring for people without insurance.

New Mexico Voices for Children’s executive director Veronica C. García said the expansion will be a boost to New Mexico’s economy because “this influx of federal money will create much-needed jobs and economic activity. Taxpayers and the state will also save money because people will be able to get preventive treatment for illnesses instead of getting much more expensive treatment in the emergency room when they can no longer wait.”

More providers needed

“We are very happy our patients are going be able to get care,” said Denise Aamodt, a physician with ABQ Health Partners and president of the Greater Albuquerque Medical Association. “A lot of people out there don’t qualify for Medicaid now who need it. The safety net is not there for them.”

Health care providers acknowledged the state needs more physicians, nurses, physicians assistants, nurse practitioners and other professionals to handle an influx of people seeking care.

New Mexico Hospital Association president Jeff Dye said that he would rather have the challenge of finding ways to serve newly insured patients than continue to serve the estimated 25 percent of New Mexicans who have no health care coverage.

“We feel like the dog that chased the car and finally caught it,” Dye said. “Expanded coverage means we’re going to have expanded demand and have a need for an expanded workforce. There are some real limitations in our work force in our state.”

“The provider shortage is not going to get better,” Aamodt said. “The state needs to be thinking about how to recruit physicians. In a small state like ours, that’s hard to do.”

“This will cause us to face the capacity issues that we have anticipated with coverage expansions,” Hinton said. “It will continue to accelerate our efforts to change how certain types of care are delivered.”

Medicaid with and without expansion

Number of Medicaid recipients: 2014 2020
without expansion 554,274 645,002
with expansion 691,382 812,033
State Medicaid spending: 2014 2020
without expansion $941.3 million $1.284 billion
with expansion $924.6 million $1.358 billion
Federal share of expansion cost:  2014 2020
100% 90%

Source: New Mexico Human Services Department

Journal staff writer Dan Boyd contributed to this story.