Study: Expanded Medicaid program would decrease state's uninsured rate, premium costs

Sep. 5—A proposed state-administered health coverage plan could drastically reduce New Mexicans' insurance premiums and the number of uninsured patients, while boosting provider reimbursements and easing employers' insurance costs, a new study says.

The state-funded study, conducted by the nonprofit Urban Institute and newly released by the state Office of the Superintendent of Insurance, offers an optimistic outlook for the proposed Medicaid Forward program, an initiative that would extend New Mexico's Medicaid eligibility to most "nonelderly" residents, or those under 65.

Premiums and copays would be set on a sliding, income-based scale.

"The results of this study are incredible," Nicolas Cordova, health care director of the New Mexico Center on Law and Poverty, said in a statement announcing the research. "... Medicaid Forward is an innovative program that will strengthen the Medicaid program and close many of the coverage gaps so many of our families fall into."

The study predicts such a program would dramatically shift health insurance enrollment and touts big numbers:

* Household spending on health care could drop by 37.9%, cutting costs nearly in half for low-income families.

* Employer health care costs could go down by a total of $229 million annually.

* Wages could go up by a total of $874 million.

* The uninsured rate could decline to between 6.1% and 5.4% from 13.1% — among the lowest rates in the country — leaving the state with 130,000 to 142,000 fewer uninsured patients.

"The proposal would substantially increase coverage at all income levels and among all racial and ethnic groups," the report adds.

"Nearly everyone enrolled in the private nongroup market would switch to Medicaid Forward because of the lower premiums and out-of-pocket costs," it says.

NM Together for Healthcare, a coalition of organizations that advocates for affordable health care, said in a statement Tuesday the plan would help the state leverage federal funds to increase reimbursements to health care providers — "in some case much more than Medicare pays providers."

The coalition approached the superintendent of insurance about having the study done in 2022 after the office received funding to look at possible health care coverage options, Cordova said in an interview Tuesday. His organization, the Center on Law and Poverty, is part of NM Together for Healthcare.

Colin Baillio, the interim deputy superintendent of insurance, said the office paid about $59,000 for the study.

The proposal builds on the federal Affordable Care Act, which created two paths for states to get more of their residents covered by Medicaid — either by offering coverage to everyone earning less than 138% of the poverty level for their region or by "unlocking the income cap" and offering Medicaid to everyone, Cordova said.

During the coronavirus pandemic, Congress required states to keep Medicaid patients continuously enrolled. That requirement ended this year, leading to more than 60,000 New Mexicans losing their Medicaid coverage.

"Currently, to qualify for Medicaid, an adult must make less than $20,120 annually for a single person household, which is less than the minimum wage for a full-time worker," NM Together for Healthcare said in a statement.

The option to expand Medicaid eligibility to most residents under 65 requires income-based premiums, Cordova said — though the total cost for premiums and copays combined could not exceed 5% of a person's household income under the federal guidelines, making it a much more affordable option than what residents now pay for their insurance.

A state law passed during the most recent legislative session, House Bill 400, directs the Human Services Department to conduct its own, more detailed study on the feasibility of a state-administered health coverage plan and to come up with a proposal for implementing it by Oct. 1, 2024.

Human Services spokeswoman Marina Piña did not respond to an email asking about the cost of that study.

However, a fiscal impact report for HB 400 says fiscal year 2024 appropriations include an allocation of $500,000 "for a study to analyze the financial, provider, and market place impacts of expanding Medicaid eligibility."

The report adds the state could leverage $500,000 "in federal administrative Medicaid matching funds to conduct the study for a total of $1 million."

Advocates of the proposed state-administered coverage program say that could mean lower health care costs for employers, which might be passed on to workers in the form of higher wages.

"Medicaid Forward is a path to provide more New Mexicans with coverage they can afford and to give employers more breathing room to reinvest in their businesses and their employees," Reena Szczepanski, D-Santa Fe, wrote in a statement Tuesday.

"Medicaid Forward shows an enormous return on investment for both public health and economic growth in New Mexico," added Szczepanski, a sponsor of HB 400. "I'm eager to find the best way to unleash that potential."

Implementation of such a program is at least two years away, Cordova said, with the Human Services Department scheduled to deliver its proposal to the Legislative Health and Humans Services Committee by October 2024.

From there, Cordova said, "it will depend on what HSD says is doable."