Report: NM health reform could cost jobs

Bill supporters say study is misleading, limited in scope

A much-debated effort to secure near-universal health care for New Mexicans could come with a hefty financial toll, according to a recent analysis conducted by Ernst & Young.

The study examines the macroeconomic implications of the New Mexico Health Security Plan, which was considered by state legislators in 2019 and reintroduced this year via House Bill 203.

The analysis, prepared on behalf of Partnership for America’s Health Care Future, which opposes single-payer health care, concludes that the HSP could lead to as much as a $5.8 billion shortfall over five years after implementation, and would require a payroll tax increase to offset that shortfall.

The high-end payroll tax estimate could cost the state as much as 27,000 job equivalents, a metric that factors in wage and hour reductions, according to study author Brandon Pizzola.

However, Mary Feldblum, executive director of the Health Security for New Mexicans Campaign, criticized the study as misleading and limited in scope.

“It’s not a serious study. It really isn’t,” Feldblum said.

The new study builds on a report commissioned by the Legislative Finance Committee in 2019 that considered the cost of the proposal. The LFC-commissioned report included four scenarios, which Ernst & Young ran through a standard macroeconomic model to get results, according to Pizzola.

According to the study, New Mexico ends up with a budget shortfall over the first five years after the program is implemented in three of the four scenarios. The report notes that the final scenario results in the program being approximately budget-neutral over that period.

Pizzola said the report assumes a broad-based payroll tax implemented by the state to cover that shortfall. Estimated taxes range from 2.3% to 0.3%.

Under the scenario where New Mexico faces a hypothetical $5.8 billion shortfall, the report

concludes that a 2.3% payroll tax would result in a $290 million annual decline in gross state product.

Ashley Wagner, director of public policy and communications for the New Mexico Chamber of Commerce, said she’s concerned the bill could hurt economic growth in New Mexico just as the state is looking to recover from the impacts of the COVID-19 pandemic.

“This is going to be an added tax,” Wagner said. “... It just seems would be counterproductive to getting us back on the path for economic recovery.”

However, Feldblum argued that the report makes assumptions that may be inaccurate. The report uses data from 2019, which Feldblum argues is likely insufficient for projecting the cost of a program slated to begin in 2024, given the seismic economic changes in 2020.

Feldblum added that the report’s narrow focus doesn’t take into account the overall rising cost of health care, and the ways that expanded health care coverage can reduce costs in the long run.

“When you have a large number of people who are uninsured, you have to factor in that they’re going to cost extra money,” Feldblum said.

Feldblum said she doesn’t expect HB204 to pass in the session’s final days, but said she’s hopeful the groundwork has been laid for future efforts.