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House OKs health insurance tax boost

In this Feb. 19 file photo, Rep. Deborah Armstrong, D-Albuquerque, presents a bill remotely as part of new rules to limit the spread of COVID-19. She is sponsoring legislation to create a new health care affordability fund. (Eddie Moore/Albuquerque Journal)

Copyright © 2021 Albuquerque Journal

SANTA FE – The state House approved legislation Monday that would raise a state health insurance tax and dedicate about $115 million in new annual revenue to programs aimed at making health care more affordable.

The increased tax would essentially replace a federal fee that was repealed. The House amended the proposal Monday to call for the increased state tax to be phased out if the federal fee is ever reimposed.

Rep. Deborah Armstrong, an Albuquerque Democrat and sponsor of the bill, said the new tax could help fund subsidies that make insurance more affordable for uninsured New Mexicans and pay for new programs to help small businesses offer insurance.

“I do think it will lower the cost for everyone. … If you have more people insured,” Armstrong said, “it spreads the risk.”

Opponents of the bill said New Mexico should allow insurance companies to benefit from the reduced federal fee without immediately stepping in with a replacement tax. The lower tax will be passed on to consumers, they said.

Rep. Rebecca Dow, R-Truth or Consequences, said small businesses could use the relief after such a tough year of public health restrictions.

“They have suffered enough,” Dow said. “They need to know that we hear them and care about them.”

The proposal, she said, leaves too much undecided, with no guarantee that the money collected will ever actually reduce health care costs for New Mexicans.

The proposal, House Bill 122, would establish a health care affordability fund dedicated to reducing the cost of health care coverage for residents and businesses.

The proposal is expected to raise about $153 million a year, with $115 million dedicated to the affordability fund and $38 million for the state general fund.

Armstrong said the federal government would pick up much of the cost because so many New Mexicans are enrolled in Medicaid, a program jointly funded by the state and federal governments.

The House passed the bill on a 43-25 vote, largely along party lines, with Democrats in favor and Republicans opposed. It now heads to the Senate with just 12 days left in the session.


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