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Medicaid spending has benefits

State agencies and the news media are rightly giving attention to the expected rise in Medicaid’s share of the state budget over the next five years.

However, the attention has been only on our state’s share of the costs, failing to address the tremendous, positive economic impact that investing in Medicaid expansion has on our state.

Any discussion of the program’s economic impact should make it clear that Medicaid and the governor’s expansion of it do not merely provide health care. Rather, they are by far, the best job-creating, economy-boosting strategy the state has to offer.

Soon New Mexico will pay a state share for Medicaid expansion, which is currently covered 100 percent by the federal government.

Starting in 2017, the state will pay 5 percent of the costs for Medicaid expansion and will pay no more than 10 percent after 2020. Early estimates from the N.M. Legislative Finance Committee say that New Mexico’s 5 percent share of Medicaid expansion will be $39.3 million in 2017 and increase to $163 million in 2020 when the state’s share of costs maxes out at 10 percent.

What is the return on this investment for New Mexico?

About $4.8 billion to $8.6 billion in economic activity between fiscal years 2014 and 2020, according to the University of New Mexico Bureau of Business and Economic Research.

This economic activity includes many new jobs, increased state revenue and enormous federal investment in our state.

While our state has been slow to add jobs across all employment sectors, the health care sector has consistently seen growth. According to the New Mexico Department of Workforce Solutions, between January 2014 and January 2015 – the first year of Medicaid expansion – New Mexico gained 10,200 jobs overall, with health care and education services representing 4,700 of these jobs.

Health care and social assistance occupations are expected to continue to lead New Mexico in job growth through 2022, adding approximately 30,000 jobs, or almost one-third of the 102,000 jobs New Mexico is expected to add during that time period.

Medicaid has already been generating and will continue to generate new revenue for the state from existing taxes and fees.

New Mexico levies insurance premium taxes on managed care organizations and gross receipts taxes from some health care providers that serve Medicaid enrollees.

A report from the N.M. Department of Finance and Administration says that our state collected $115 million from insurance taxes in fiscal year 2014.

That report also states that DFA estimates revenues from these taxes will balloon to $237 million in fiscal year 2019. New Mexico can also expect additional revenue from incomes taxes and other gross receipts taxes as new jobs and income are generated by the influx of federal dollars due to Medicaid expansion.

Finally, like other federal investments in support of business – such as federal funding for our highway system to support interstate commerce, for subsidies to support our agricultural industry, for the enormous tax breaks that support petroleum companies – federal investment in our health care industry via Medicaid amounts to a hefty $4 billion per year into the New Mexico economy.

Yes, the Medicaid program will cost an increased share of the state budget. And it will generate more economic activity, state revenue and jobs per dollar invested than any tax break, economic development plan or investment available to us.

Oh, and it will provide health care to nearly a million New Mexicans by 2022, contributing to a healthier, happier and more productive work force.

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