Medicaid health care spending is expected to put an increased strain on New Mexico state finances in the coming fiscal year, even with generous federal provisions of the Obama administration left in place, according to state agency documents released Friday.
The state Human Services Department that oversees Medicaid health care for low-income and disabled residents has requested an $84 million increase in general fund spending for the budget year that starts in July 2018.
Medicaid demands account for nearly the entire shortfall, and could make it more difficult for the state to sustain spending on everything from courtrooms to public classrooms and state universities.
New Mexico is on track to collect just $25 million more in the coming fiscal year than it currently spends, as surging oil production pulls state government out of a budget crisis that spurred budget cuts to public colleges and universities and austerity measures across state government.
“We have $25 million in new money, and that doesn’t even take care of inflation,” said Sen. John Arthur Smith, the Democratic chairman of the Senate Finance Committee.
New Mexico’s Democrat-led Legislature gathers in January for a 30 day session to craft a state budget. It will be the final budget crafted under GOP Gov. Susana Martinez, who has vehemently resisted outright tax increases while signaling a willingness to overhaul tax exemptions and loopholes.
New Mexico currently spends a little over $900 million on core Medicaid programs, under a $6.1 billion general fund budget.
The federal government contributes well over $4 billion annually to local Medicaid programs, with Republican plans to overhaul health care subsidies and enforcement provisions stalled in Washington.
Residents of New Mexico have flocked to enroll in Medicaid since eligibility was expanded in 2014 under provisions of the Affordable Care Act. That has helped cut the number of uninsured residents in half since 2013.
About 9 percent of the New Mexico residents currently live without health insurance.
Legislative analysts say the state’s growing Medicaid tab is linked to a slight reduction in federal subsidies, the gradual addition of new patients and how much patients rely on assistance.
Congress could remove some of the pressure on New Mexico’s state budget by extending current support to the nationwide Children’s Health Insurance Program, which funds health care for children in low-income families in New Mexico through Medicaid.
By mid-2019, about 922,000 New Mexico residents are expected to be enrolled in Medicaid on a part- or full-time basis, in a state of 2.1 million people.