NM officials warn of hospital closures, job losses as federal bill advances

SANTA FE — Even as the votes in the U.S. Senate were still being cast on President Donald Trump’s sweeping federal tax bill on Tuesday morning, top New Mexico health officials were warning state lawmakers about the looming impact.

While pointing out the bill was still being amended on Capitol Hill, state Health Care Authority Secretary Kari Armijo told members of a legislative panel that six to eight rural New Mexico hospitals could close over the next several years due to the bill’s Medicaid changes.

Specifically, she cited hospitals in Gallup, Las Vegas, Taos and Clayton as among those at the highest risk.

“It’s those rural facilities that I think are in pretty substantial danger,” said Armijo, who added rural hospitals disproportionately rely on Medicaid funding.

She also reiterated projections that nearly 90,000 New Mexico residents could lose health care coverage under the federal bill, while more than 250,000 state residents could face new co-pays and increased administrative hurdles to remain enrolled.

The estimated health care coverage losses would be caused primarily by increased eligibility checks and ramped-up work requirements for certain adults that would start in 2027.

New Mexico would face such an outsized impact from safety net changes proposed by Trump’s “Big Beautiful Bill” because the state has the nation’s highest percentage of residents covered by Medicaid and the Supplemental Nutrition Assistance Program, or SNAP.

As of May, there were more than 814,000 New Mexicans enrolled in Medicaid — or about 38.5% of state residents.

Even as state Medicaid enrollment has declined over the last two years from a record high, state and federal Medicaid spending has continued to increase, reaching a combined total of $11.6 billion in New Mexico for the current budget year.

Impact on state’s health care industry

New Mexico has already grappled with a health care provider shortage in recent years, and any hospital closures could exacerbate patient access issues while also causing job losses.

Medicaid cuts included in the bill could cause over 1,300 hospital job losses in the state, New Mexico Hospital Association Senior Director of Government Affairs Julia Ruetten said during a Tuesday legislative subcommittee meeting.

The pool of funds New Mexico can use to pull down federal Medicaid dollars for hospitals would be reduced because of a lower cap on the provider tax, cutting the reimbursement dollars going to hospitals by a third. The state program those funds are distributed through was set up to advantage rural hospitals in particular.

Simultaneously, the Senate bill would reduce the cap on the Medicaid reimbursement rate from the average commercial insurance rate to no more than Medicare rates, which could negatively impact New Mexico’s efforts to recruit new medical providers, according to New Mexico Hospital Association President Troy Clark.

New Mexico has a particularly high average commercial insurance rate and a low Medicare reimbursement rate.

Before the bill was narrowly approved, senators included a new $50 billion fund for rural hospitals in the bill. If existing Health Resources and Services Administration definitions for rural are used for the fund, hospitals in Albuquerque, Santa Fe, Las Cruces and Farmington would not be eligible, but other New Mexico hospitals would, according to Clark. The bill requires hospitals to apply for funds by the end of the year.

The bill could set up a funding cliff for hospitals, Ruetten said, because the stabilization fund ending and the final stepdown of the Medicaid reimbursement rate would happen around the same time, in 2032.

Sen. William Soules, D-Las Cruces, the co-chairman of the Federal Funding Stabilization Subcommittee, said Tuesday the state should prepare to help eligible residents avoid losing health care coverage.

Food aid cuts

Medicaid isn’t the only challenge facing the state if the “One Big Beautiful Bill” passes the House this week. “We have many vulnerable people in this state who are going to be affected by these changes,” Soules said, referring to the SNAP cuts.

But several Republican lawmakers raised questions about the state’s high error rate for food assistance applications, which could trigger a cost-sharing provision under the federal budget bill.

In response, Armijo said an interview requirement for food assistance beneficiaries that was waived during the COVID-19 pandemic and recently reimplemented could partially explain the state’s error rate. The rate was at 14.6% as of last year, primarily due to overpayments.

Armijo also said top state officials might travel to other states in the coming months to study best practices for determining eligibility.

The federal budget bill would also impose increased work requirements for SNAP recipients in most parts of New Mexico.

If implemented today, Luna County and the Jicarilla Apache Nation would be the only parts of New Mexico exempted from those work requirements since they have unemployment rates higher than 10%, Armijo said.

Political landscape as bill nears approval

Gov. Michelle Lujan Grisham said earlier this year approval of the federal budget bill could prompt her to call lawmakers back to Santa Fe for a special legislative session later this year.

The governor said Tuesday that Senate Republicans had “betrayed” the American people by approving the bill.

“This bill is a disastrous, deficit-exploding gift to the ultra-wealthy made possible by gutting health care and food programs that millions of Americans rely on,” Lujan Grisham said in a statement while urging New Mexicans to pressure Republican members of the U.S. House to vote against final approval.

New Mexico’s two U.S. senators, both Democrats, voted against the bill, with Sen. Ben Ray Luján saying it would gut health care for children and families.

With the bill now heading back to the U.S. House for reconciliation, U.S. Rep. Teresa Leger Fernández, D-N.M., said Tuesday she would introduce an amendment to pull out tax cuts for the wealthy while leaving in tax cuts that benefit middle- and low-income people. House GOP leaders, though, are aiming to pass the Senate version of the bill without amendments to get it to President Donald Trump’s desk to sign into law by Independence Day.

For his part, U.S. Rep. Gabe Vasquez, D-N.M., said he would work to try to strip two provisions in particular from the bill that affect hospitals, one limiting state-directed payments and one connected to provider taxes.

“We must make sure this reckless bill never makes it through the House,” Vasquez said in a statement.

While Democrats vowed to try to blunt the bill’s momentum, New Mexico’s Republican Party leadership applauded its passage.

“President Trump’s Big Beautiful Bill delivers exactly what New Mexicans have been asking for,” Republican Party of New Mexico Chair Amy Barela said in a statement, “lower taxes, bigger paychecks, secure borders, and a government that finally puts Americans first.”