New Mexico’s high-stakes debate over Medicaid expansion

By | August 21st, 2012

A major public policy debate is brewing about whether or not New Mexico Gov. Susana Martinez should exercise a state option to expand Medicaid’s coverage under ObamaCare. New Mexico’s Voices for Children, a progressive group, asserts that by doing so there will be no net fiscal impact to the state’s General Fund. 

But the old saying seems to apply: if the deal sounds too good to be true, it probably is.

Expanding Medicaid would cover all adults that earn less than 138 percent of the federal poverty level, covering more than 100,000 additional people in New Mexico (beyond the 562,000 estimated beneficiaries as of 2009 in the state). Voices for Children cites a New Mexico Human Services Department estimate that the state’s upfront General Fund cost for the expanded coverage would be as much as $496 million through 2020.

“However, that investment will be more than offset by new state tax revenues — estimated in this report at between $693 and $953 million — from the economic activity that the federal funding will stimulate. The additional revenue — between $373 and $457 million over seven years — will go into the state General Fund where the Legislature will be able to appropriate it as it sees fit,” says the group’s report.

Additionally, the report points to revenue from New Mexico’s 4 percent insurance premium tax and the gross receipts tax when Medicaid benefits are paid by insurers to health care providers.

On a recent episode of New Mexico in Focus [see video above], Kelly O’Donnell, the author of the report, said that…

“…The reason to do it now is because the federal government is willing to foot the entire bill for the first three years. Health insurance isn’t cheap. It’s never cheap and when you’re talking about insuring hundreds of thousands of people who don’t have health insurance that’s a lot of money coming into the state’s economy and the federal government, for the first three years of the expansion, would pay 100% of the cost. You don’t get that kind of deal very often from the federal government or anywhere else. And even after the state has to start sharing in the cost, the cost-sharing is very minimal…”

That is, if taxpayers could afford it, which they can’t.

“Of course, even the federal pledge to reimburse 90 and 100 percent of Medicaid expenses is based on the massive assumption that Congress will keep its promise to fund the Medicaid expansion indefinitely and into the future,” wrote Paul Gessing, president of the Rio Grande Foundation, in the Las Cruces Sun-News. “Federal Medicaid spending is growing at unsustainable rates (even before the Obamacare expansion) and the nation is running trillion-dollar deficits ever year.”

According the National Center for Policy Analysis, the combined unfunded liability of both Medicare and Social Security is $107 trillion in [2009] dollars, including $89 trillion for Medicare alone.

Then there’s the access and quality of care issues.

“Over the years, Medicaid patients have suffered from dropped coverage, denied care and poorer health outcomes – sometimes placing patients in worse situations than those encountered by the completely uninsured,” wrote Joseph Montes of Americans for Prosperity - New Mexico in the Albuquerque Journal. “Ultimately, Medicaid is a broken program.”