OPINION: Medicaid cuts will hurt NM health and economy

As a physician and health economist, I approach public policy with a dual lens: one grounded in clinical care and the other in the allocation of scarce resources. New Mexico’s Medicaid program, covering approximately 38.5% of the state’s population — is now at risk due to proposed federal funding cuts. These changes, framed in Washington as fiscal responsibility, may lead to deeply harmful downstream consequences for our state. The debate cannot remain at the surface level of dollars and cents. We must examine second-order effects and broader opportunity costs.

Medicaid is a lifeline for low-income families, rural residents and children in New Mexico. If the federal match rate for Medicaid expansion is reduced from 90% to about 72%, as proposed by some federal policymakers, our state could lose over $450 million in federal funding annually, affecting up to 262,000 people. More than 260,000 New Mexicans could lose health coverage, including 95,000 children and 83,000 rural residents — demographics for whom access to care is already tenuous.

For a state with persistent poverty, a physician shortage, and vast rural areas, this isn’t just a budget issue — it’s a public health crisis in the making.

These cuts would trigger cascading effects across our health care ecosystem. Without Medicaid reimbursement, hospitals — especially rural and safety-net facilities — will face financial shortfalls. This will likely lead to layoffs of health care workers, closure of clinics and reduced services. Increased uncompensated care burdens providers and results in higher emergency department usage for avoidable conditions. These inefficiencies drive up costs and worsen population health.

Moreover, health care job losses ripple through the local economy. Medicaid is not just a benefit; it is an economic engine supporting thousands of jobs statewide.

From an economist’s standpoint, every dollar cut from Medicaid must be evaluated in terms of what is gained — or lost. Are these savings being reinvested in education, infrastructure or economic development? Rarely. These cuts are usually short-term deficit management tactics or political concessions, not long-term investments.

Investments in Medicaid reduce downstream costs in law enforcement, foster care and disability services. A healthier population means fewer social burdens and greater economic productivity. By cutting Medicaid, we may temporarily “balance” a budget, but at the expense of future fiscal stability and social well-being.

In response to federal threats, the New Mexico Legislature has wisely approved a $2 billion Medicaid Trust Fund to cushion against potential federal retrenchment. This is prudent policy. But trust funds are not a long-term substitute for sustainable federal support or state-led reforms.

Instead of blunt cuts, we should pursue strategies that enhance value: transitioning to outcome-based payments, better integrating behavioral and physical health services and reducing administrative burdens. These reforms control costs while improving care.

Most importantly, we must tackle the root causes that drive Medicaid dependency — poverty, underemployment and lack of education. Medicaid is not the problem; it is a symptom of deeper inequities and a tool to address them.

New Mexico stands at a policy crossroads. We can choose austerity and endure its consequences, or we can choose informed investment in the health and future of our people.

As both a clinician and economist, I urge policymakers to resist the allure of easy cuts. The true cost of slashing Medicaid is not measured solely in dollars saved, but in lives disrupted, public health undermined and economic vitality sacrificed.

We need not more cuts — but better policy. Let us lead with data, compassion and foresight.