Despite massive spending, New Mexicans aren't getting healthier, report finds

Margaret O’Hara, The Santa Fe New MexicanThe Santa Fe New Mexican

It sounds like a paradox.

Despite rising healthcare costs for consumers and insurance companies alike, New Mexico residents aren’t getting any healthier, experts told members of the Legislative Finance Committee on Wednesday. Even insurers are struggling to turn a profit in some local markets.

Federal policy changes, meanwhile, are expected to make the contradiction even worse. The One Big Beautiful Bill Act, a major Republican tax and spending bill signed into law a year ago, is expected to result in more uninsured New Mexicans and more uncompensated care, pushing insurance costs even higher, Health Care Authority Cabinet Secretary Kari Armijo told lawmakers Wednesday.

The panel’s discussion led Sen. George Muñoz, a Gallup Democrat, to one conclusion: “This whole system is wrong. … I see some real wrongs that I think need to be made right.”

Spending on New Mexico’s Medicaid program — which covers nearly 40% of the state’s population — doubled between fiscal year 2017 and fiscal year 2025, despite a 21% decrease in enrollment since 2023, Legislative Finance Committee analyst Eric Chenier told lawmakers Wednesday.

Health insurance premiums have also risen in the private market. Individual plans — sold on and off the state health insurance marketplace as part of the Affordable Care Act — saw an average rate increase of nearly 36% between 2025 and 2026, data from the New Mexico Office of the Superintendent of Insurance shows. Premium rates for small group health insurance — which are available to small employers with fewer than 50 employees — increased during that period, too, at an average of nearly 17%.

There are a few factors — which are consistent with nationwide trends — contributing to higher costs on Medicaid and the private market.

Chenier said hospital prices are among the dominant drivers of the price increases, even though the state’s Health Care Delivery and Access Act boosted hospital revenue by about $1.9 billion in fiscal year 2024 to offset the partially uncompensated costs of serving Medicaid patients.

Significant growth in pharmacy spending, particularly on weight loss drugs and other specialty medications, have also increased costs, along with inflation and post-pandemic labor shortages, Chenier said.

In general, people have also gotten sicker and require more complex care now than in previous years, which also drives up costs, Armijo said

“We are seeing higher average acuity, so our remaining members have higher relative healthcare needs, medical complexity and costs,” she said of the state’s Medicaid population.

Those higher costs spell trouble for companies that provide Medicaid and commercial insurance in New Mexico, state Superintendent of Insurance Alice Kane said during Wednesday’s meeting.

Blue Cross and Blue Shield of New Mexico reported a 4.9% net underwriting loss in 2025, across commercial insurance, Medicaid and Medicare, according to Kane’s presentation. Presbyterian Health Plan faced a 1.6% net underwriting loss the same year.

Despite the increasing costs, New Mexicans don’t seem to be getting healthier, Chenier said. He pointed to the state’s overdose death rate as an example of that: Overdose deaths in New Mexico rose in 2025, despite double-digit decreases nationwide.

“With the amount of money that we’re pouring into the system, we would expect to see better outcomes,” Chenier said.

Albuquerque Republican Sen. Nicole Tobiassen encouraged her colleagues to brainstorm possible policy fixes around healthcare access and costs — which she argued are connected to the state’s K-12 and higher education systems.

“If we don’t have a viable workforce and families that feel like there’s hope for a better future, we’re going to go further and further in the hole,” Tobiassen said.

She added, “In a lot of ways, we’re looking at the rearview mirror; we’re not looking ahead at the dials on the dashboard and through the windshield. It’s always, ‘Here’s where we’ve found ourselves.’ “