I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
While environmental activists played their part yesterday during demonstrations at the capitol building, going so far as to dress up as solar panels and to sing the tune of “You Are My Sunshine,” their counterparts, the anti-cap-and-trade contingency who has…
Roughly one quarter of University of New Mexico students are unimpressed with the state’s flagship public school, according to a survey that questioned college students about their higher education experiences.
Get ready for sticker shock, New Mexico.
In 2014, the federal government will pay 100 percent of health care costs under Medicaid, the government’s low-income health care program, thanks to the new federal health care reform law.
But between now and then the health care portion of New Mexico’s state budget could soar — by one estimate $500 million annually – due to a confluence of factors including more people enrolling in the government program and federal stimulus dollars disappearing.
The coming cost begs a question: How will New Mexico pay for it all?
That question has state lawmakers stumped, and easy answers appear in short supply.
“It’s going to be quite a jolt,” said Sen. John Arthur Smith, D-Deming, and chairman of the Senate Finance Committee.
“I think we are going to have a tough couple of years,” added Sen. Dede Feldman, D-Albuquerque.
Smith, Senate Finance Committee chairman and vice-chairman of the Legislative Finance Committee, put at $500 million the extra cost annually that New Mexico will bear to pay for Medicaid and Children’s Health Insurance Program (CHIP) in the years before the federal government assumes 100 percent of Medicaid costs in 2014.
That estimated price tag comes at a particularly bad time. New Mexico’s state revenues are unable to keep up with expenses, leading Gov. Bill Richardson’s administration to engage in a financial tug-of-war with powerful lawmakers over whether the state can make it through this year, which ends June 30, without a deficit. The administration says yes. Some lawmakers aren’t so sure.
At the same time the state faces a “revenue cliff” — the point when federal stimulus dollars that have helped pay for increased health care costs disappear.
The shortage of cash, and growth in expenses, is a toxic mix that likely will lead to a particularly tough legislative session in 2011 and add fuel to an already-fierce debate that has roiled recent legislative sessions. How do you respond when revenues can’t keep up with growing expenses: cut spending or raise revenue?
Many reasons for the big number
The eye-catching number — $500 million — is due to a convergence of things.
First, state officials project that the number of New Mexicans, adults and children, using Medicaid and Children’s Health Insurance Program (CHIP) will grow by 8 percent between this past December and June of next year, from 479,000 to 518,000 individuals. CHIP provides health care for low-income children from families that make too much to qualify for Medicaid.
Currently New Mexico pays roughly 20 percent of Medicaid costs, thanks to federal stimulus dollars. The federal government picks up the other 80 percent. But paying one fifth of the costs is a struggle because of lagging revenues, state officials have said.
Add the coming tide of new beneficiaries – and the cost to insure them – to the fact that federal stimulus dollars now helping New Mexico pay for Medicaid run out in December, unless Congress extends the deadline. (The loss of federal stimulus dollars will lower the federal government’s share of paying for Medicaid to around 70 percent, meaning New Mexico’s share will increase to near 30 percent.)
In essence, New Mexico faces a double whammy: find money to replace the lost federal dollars while trying to figure out how to address the growing enrollment in Medicaid and CHIP.
It’s “that witching hour” where revenues can’t cover growing expenses – at the same time the state loses federal dollars — that state officials have feared, Smith said.
Growth in health care need
The projected growth in Medicaid and CHIP is largely due to the bad economy. People are losing jobs or they can’t find jobs as many businesses – and governments – are cutting back.
“We recognize that we are the safety net programs,” said Betina Gonzales McCracken, spokesperson for the state Human Services Department. “When people lose jobs, they don’t think about losing health coverage.”
The projected growth in Medicaid and CHIP programs comes despite the state’s decision to stop trying to find people who qualify to help them enroll. “Over the past year we haven’t done a lot of outreach,” McCracken said.
Instead “people are signing up by themselves” said Feldman.
The rolls of both programs provides the proof.
From December 2008 to December of last year, the populations in the two programs grew by 6.7 percent, 448,888 to 479,301, McCracken said.
And that growth will continue, putting pressure on the state budget, lawmakers said.
Then in 2014 the federal government will step in to pay 100 percent of Medicaid costs for that calendar year and the two years after, 2015 and 2016, McCracken said. Then in 2017 states will have to assume 5 percent of the costs; the next year 6 percent; in 2019 7 percent; and then in 2020 10 percent.
But it’s getting to 2014 that will be tough, lawmakers said.
