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NM Faces Medicaid Crisis

NM Faces Medicaid Crisis

Republicans want to end the Medicaid expansion program in 2020

New Mexico was already facing a major bomb hit in its Medicaid program under Obamacare, but the Republican effort in Congress to rewrite the Affordable Care Act could deliver a nuclear strike to the state’s Medicaid program.

Whether the merely gets bombed, or severely irradiated, depends on how the Republicans deal with Medicaid expansion, which Gov. Susana Martinez bought into in 2013.

In the worst case scenario, the state could lose more than $1.4 billion in federal Medicaid money—no small figure a state whose GDP was $86 billion in 2015—and it could be forced to drop about 270,000 low-income adults from its Medicaid rolls.

That would leave them scrambling for medical care.

Republicans want to end the Medicaid expansion program in 2020. But how they end it is the key. One option is to tell the states that their federal Medicaid match money will be funded at pre-expansion levels, said Jeff Dye, president and CEO of the New Mexico Hospital Association.

If that happens the state would have to scramble to find an additional $1.4 billion for Medicaid, which represents what the feds are paying now for those 270,000 adult expansion recipients. And if the money isn’t there, those people could find themselves without health insurance.

The state currently spends $1.2 billion out if its $6.1 billion budget on Medicaid, which is a joint state-federal health care program for children from low-income families and low-income adults. With federal matching dollars, the state’s total Medicaid budget for next year would be $5.8 billion.

Under the second scenario, the Republicans could end the expansion, keep all those newly enrolled adults, but fund them at lower levels.

‘Where do we establish the baseline, pre-expansion, or post-expansion?” Dye said. “It could have a devastating impact on our hospitals [because they would be forced to care for people without health insurance]. The feds could say, ‘You’ve got all this expansion coverage and we’re going to give you zero percent.”

   A mere bombing

New Mexico and other states that signed up for Medicaid expansion under the ACA were always facing budget crunches down the road because of the program. That’s because for the first few years the feds picked up 100 percent of the cost of those new, adult enrollees. But under the ACA, the feds would ratchet down their share of the expansion adults to 90 percent of the cost by 2020. So New Mexico was already looking at having to come up with another $400 million by 2020 to make up for the reduced federal share of covering those expansion adults.

Wait, there’s more

Republicans are also looking to cap total Medicaid payments by giving states a finite amount of block grant money for the program. That differs from the current funding mechanism in which the feds simply match 3-to-1 any money the states budget for Medicaid. In New Mexico, the feds generally provide three dollars for every dollar the state appropriates. Losing that three-to-one match could also be devastating to the state, Dye said.

   Uncompensated care

Taking care of people without health insurance and who can’t afford to pay their bills is something hospitals are required to do. Before the ACA and Medicaid expansion, New Mexico’s hospitals spent about $300 million a year in uncompensated care. That has dropped to $100 million a year under the ACA and Medicaid expansion. Dye said it would increase if the feds cut Medicaid.

Whatever happens in Congress regarding New Mexico is sure to lose because its Medicaid rolls keep growing. In February, 904,258 state residents, or 43.4 percent of the population, were on Medicaid. The state projects that the rolls will grow to 950,000 by June of 2018.

Dennis Domrzalski is an associate editor at ABQ Free Press

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Dennis Domrzalski is managing editor of ABQ Free Press. Reach him at dennis@freeabq.com.

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