Guest Blog: New Mexico Can’t Afford to Get it Wrong About Medicaid

This is a guest blog by Sireesha Manne, Attorney, New Mexico Center on Law and Poverty.

Governor-elect Martinez will soon have to deal with the daunting fiscal challenges facing New Mexico while honoring her promises, most notably to protect Medicaid from further program cuts.  Her commitment to Medicaid is a wise one: few policymakers doubt the powerful and vital role of Medicaid in New Mexico’s economy and healthcare system. The program has been a saving grace for the state, providing healthcare coverage to over half a million people. The program also brings $3 billion federal dollars into our economy that supports over 50,000 jobs, mostly in the healthcare sector.

Yet there has been considerable misinformation in the public eye due to recent news coverage about the costs of the program and about its services in comparison to the programs in other states. Lest New Mexico shoot itself in the foot by taking a slash-and-burn budget approach to a program that has helped the state weather the continuing economic storm, it’s critical to set the record straight about Medicaid.

#1: Medicaid is facing a $360 million shortfall primarily because the state borrowed a huge sum of money from the program that has not been returned. When New Mexico received federal stimulus funds for Medicaid in 2009, the state removed approximately $200 million in state general funds from the program and used it to bail out other parts of the budget in a time of economic crisis. The federal stimulus funds will expire by the end of this fiscal year, requiring the state to replace the money it borrowed from Medicaid. The legislature should repay the loan now as it always intended to do.

#2: New Mexico’s Medicaid program is well-aligned with other states. Recent news articles on the subject assert that New Mexico provides more expansive Medicaid services than other states. However, the facts don’t support this. As the Secretary of the Human Services Department has testified to the legislature on many occasions, New Mexico Medicaid benefits are no more generous than those offered in other states. All 50 states offer prescription drugs, 47 states offer hospice services, 43 offer eyeglasses, and the majority of other states offer hearing aids and dentures. Although these services are not mandated by the federal government, states have chosen to cover them because they are medically necessary and meet the needs of their populations.

Every state also offers Medicaid and the Children’s Health Insurance Program (CHIP) to children whose family incomes are higher than the federally mandated level. Our income eligibility levels for Medicaid and CHIP are in the middle of the pack compared to other states, with 25 other states having more generous levels than New Mexico for children’s coverage. It is worth noting though, that New Mexico should lead the pack with our Medicaid and CHIP programs, given that we still have the seventh highest rate of uninsured children in the nation.

We do even worse when it comes to Medicaid coverage for parents. Though many believe that reasonably well-off parents can receive Medicaid, this is hardly true. Jobless parents must have very low incomes of less than 29% of the poverty level to receive Medicaid coverage in New Mexico. This means that a family of three must make less than $5,370 annually to qualify for the program. As a fallback for these parents and other adults living in poverty, New Mexico started the State Coverage Insurance program (SCI). But enrollment in this program has been frozen and there are nearly 24,000 people on the waiting list.

#3: New Mexico has already made major cuts to Medicaid, minimized administrative costs, and strengthened fraud detection activities. Those who would complain about efficiency or rising costs in Medicaid should specify what cuts they would propose, because most of these have probably already been made or cannot be adopted because they are unlawful. With federal restrictions on reducing eligibility levels in Medicaid, the Human Services Department has already cut administrative costs, payment rates and healthcare services.

In fact, the Department cut administrative costs even though they make up less than 3% of Medicaid program costs in comparison to 15% to 20% in the private market.

Reimbursement rates to medical providers were cut by 3% due to budget shortfalls and more reductions are in store for hospitals. Managed care contracts were renegotiated to lower costs. And not only was the State Coverage Insurance program frozen to new enrollment, long term care and vision care services were reduced. Numerous proposals are on the table to cut more healthcare services.

Additionally, federal funds have been used to strengthen fraud detection activities. The Department is also consulting regularly with advisory groups of healthcare providers and community advocates to find long term ways to save costs in the program without hurting consumers. This has been difficult work that should be recognized and encouraged.

#4: Medical costs would be even higher without Medicaid coverage. Finally, it’s important to note that costs have risen in Medicaid in recent years because more people are seeking healthcare coverage as they lose their jobs in this recession and because medical costs continue to rise. These are problems that exist throughout the country. However, because we have such a high rate of uninsured in New Mexico, reducing Medicaid would impact us more by pushing healthcare costs for all New Mexicans even higher. New Mexicans already pay twice the national average in extra premiums due to cost shifting from the uninsured to the insured.  Increasing the number of uninsured would make this worse as more care provided by doctors and other healthcare professionals goes uncompensated, more uninsured people use expensive emergency room care, and private insurance premiums increase as a result.

We all have a stake in ensuring that every New Mexican receives affordable healthcare coverage and that our economy receives all the support that it can. Medicaid has been critical to achieving both goals.  It’s important for the new administration to know the true reasons for Medicaid budget shortfalls as they look for responsible solutions that will sustain this cornerstone of our healthcare system and major driver of our economy.

This is a guest blog by Sireesha Manne, Attorney, New Mexico Center on Law and Poverty. If you'd like to submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link on the upper left-hand corner of the page.