Ranking No. 1 in Medicaid shows how sick NM economy is

New Mexico has attained top status in a statistic with a huge fiscal impact that speaks volumes about the literal health and economic welfare of the state.

We are now No. 1 nationally in reliance on Medicaid for health care, with 43% of the state’s population enrolled in the program for low-income people — and which now pays for a shocking three-quarters of the births across the state.

The state’s Medicaid enrollment — which exceeds 860,000 — was already near the top and grew by about 1.5% a month during the COVID-19 pandemic and the state’s tougher-thanmost restrictions imposed in response to it.

Nicole Comeaux, director of the state Medicaid Assistance Division, told lawmakers last month the increased enrollment meant more COVID-inspired federal matching money, which was bumped from $3.65 for every state general fund dollar spent on the program to $4.76. That extra funding is set to expire in April and, unless extended, will leave the state with a $170 million shortfall for the coming fiscal year.

Meanwhile, a state House committee this week approved a budget with $1.134 billion for Medicaid for next fiscal year.

Providing more people with health care coverage is a good thing. Gov. Susana Martinez expanded the program, and the Journal Editorial Board supported that. But as a state we need to deal with the fiscal impact and find better ways to get people not only medical care, but financial independence.

One major impact of increased Medicaid enrollment is on New Mexico hospitals, which were slammed by last year’s surge of COVID patients and loss of revenue from patients either ineligible for care under Gov. Michelle Lujan Grisham’s order limiting “non-emergent” procedures or afraid to seek care.

The New Mexico Hospital Association estimates the current revenue-vs.-expenses gap caused by COVID around $193 million statewide — and that’s after more than $350 million in federal funds to shore up hospitals in the state. And COVID costs, many of them unreimbursed, continue. Lovelace Health Systems this week had 52 people whose sole job is to screen people coming into hospitals and clinics.

The bigger issue is the growing Medicaid program doesn’t pay its way when it comes to reimbursing for actual costs.

A presentation to state lawmakers by the 46-member hospital association puts Medicaid reimbursement around 90% of actual costs with federal supplemental payments. That’s lower for hospitals that don’t receive the payments. Medicare is better, averaging around 95% of cost, the association says.

That means red ink for about 80% of the state’s population for which reimbursement rates are dictated by the government. Hospitals, for-profit or not-for-profit, pay salaries (about 55% of expenses statewide), buy supplies (11%), and we expect them to invest in the newest technology.

So where do they make up the deficit? Mostly from the shrinking private insurance coverage market that accounted for only about 14% of the statewide hospital patient mix in 2019. If you have private insurance, you can’t help but notice that your premiums and deductibles keep going up.

This dynamic is a much bigger deal here than in a state with a much lower Medicaid population and thus a bigger and more robust private sector with employer-provided health insurance. So what’s the bottom line? If we look at more and more Medicaid money from the feds as an economic engine, we do so at our own peril. At best, we get a healthier population that at some point can find a job, many of those jobs out of state. Instead, we need to find a way to kick-start and nourish a private sector that employs people and provides benefits including good health insurance.

The latter approach provides hope. The former is just a prescription for a sicker and sicker state economy.