New Mexico Expanded Medicaid. Now They’re Facing a $417 Million Shortfall.

When New Mexico opted to expand Medicaid under Obamacare, they bought into the whole “free money” scam believing that it would be easy to pay for new enrollees on the state’s Medicaid program.

Well, as many level-headed people pointed out, nothing is ever really free, and New Mexico would eventually have to cough up the cash to pay for this expansion.

That day has come, and the bill is unaffordable.

A draft copy of the 21-page of a Health and Human Services Department form proposed for use to apply for low-cost insurance from Medicaid or the Children's Health Insurance Program is photographed in Washington, Tuesday March 12, 2013. The government s application for health insurance, which uninsured people will use to get taxpayer subsidized coverage starting next year. Applying could get complicated, with multiple questions about income, household composition, employer coverage and even race and ethnicity. Credit: AP
Credit: AP


The Albuquerque Journal reports that “New Mexico’s budget crunch has left the state facing a $417 million Medicaid shortfall over the next 16 months.”

As they point out this is likely to mean “reduced reimbursement rates for providers and hospitals and, down the road, new mandatory payments for some patients.” This will undoubtedly lead to more health care providers turning away Medicaid patients; a problem that is already hampering access to care in many places across the country.

What’s behind the dramatic shortfall?

Higher than expected enrollment, something else that the state should have foreseen, as it’s a problem seen coast-to-coast in states that expanded Medicaid. Now “roughly 850,000 New Mexicans are on the state’s rolls, and that number is expected to rise.”

I’ve reported on this issue in New Mexico before. The trend started last spring when enrollment was already nearly 20 percent higher than they had planned. That upward momentum continued into the summer when the rolls ballooned by 46,000 more than initial estimates.

At the time David Abbey, the director of New Mexico’s Legislative Finance Committee, said there is “no doubt” that the state’s Medicaid spending would “be the driver of future budget negotiations.” He has been proven to be correct.

The unexpected costs and poor budget planning at the state’s capitol have led to the problem they are now facing. Last legislative session, the state’s Human Services Department didn’t get enough funding and “came up $86 million short of what it projected it needed in state funds for the next 16 months.” Washington, D.C. pays New Mexico $3 or $4 for every dollar the state spends, “so the total shortfall balloons to $417 million when the missing federal matching funds are factored in.”

The state admits that although cost-cutting measures, like provider rate cuts and new co-pays for currently free services are on the table, “making up the entire shortfall by cutting costs is impossible.”

Jim Hinton, CEO and president of New Mexico’s Presbyterian Healthcare Services, told the Albuquerque Journal that “it’s just simply not possible to take that much money out of Medicaid and not directly affect patients, members and health care providers.”

Unfortunately, the problem is only set to get worse, as the state’s Human Services Department is estimating that by July of next year, “more than 925,000 New Mexicans – nearly half the state’s population – will be enrolled in Medicaid. That’s up from about 560,000 New Mexicans on Medicaid rolls at the start of 2013.”

Even more drastic budget cuts will need to be made at that point. Schools, public safety, transportation, all those sections of the budget and more will be on the chopping block just to cover the skyrocketing costs of their expanded Medicaid program. New Mexico is already one of the poorest states in the Union, this mistake will only make that worse.

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