NM Health Care Bill Would Save Money, But Not As Much As Expected

May 27--Universal health care in New Mexico could extend coverage to nearly 190,000 uninsured state residents by 2024 but may not provide the kind of savings some of its proponents expect, according to a new draft report commissioned by the Legislative Finance Committee.

Because it projects far less savings than supporters of the proposal had suggested, the report could be fuel for those who don't want private insurance companies to be placed under a state-provided umbrella plan, said state Sen. Jerry Ortiz y Pino, a co-sponsor of the proposed New Mexico Health Security Act.

"The insurance industry will jump all over it," Ortiz y Pino, D-Albuquerque, said of the report.

Ortiz y Pino said the findings also may make some members of the Legislative Finance Committee leery of backing the universal health care proposal that is co-sponsored by Rep. Deborah Armstrong, D-Albuquerque, chairwoman of the Health and Human Services Committee.

The LFC announced in December it would award $389,000 to study the fiscal impact of the proposed Health Security Act, which supporters have argued would ensure affordable health care for every resident and streamline claims under a single health co-op managed by the state.

Ortiz y Pino had argued it would slash health insurance costs by at least 25 percent to 30 percent, streamlining administration and erasing the need for insurance advertising and profit. More than 160 organizations in New Mexico supported the Health Security Act in the January 2019 legislative session, including the city of Albuquerque.

The preliminary report from Rockville, Md.-based KNG Health Consulting LLC, London-based IHS Markit and Albuquerque analyst Lee Reynis said the proposal would reduce the state's projected uninsured rate from 11 percent in 2024 to less than 1 percent. That could cover some 188,000 people expected to be uninsured that year while extending coverage to hundreds of thousands more who are currently on Medicaid or employer-based plans.

But the report projects the total cost of the program would be about $21 million less than the current combination of Medicaid, employer-based plans and coverage purchased through the federal health exchange program between 2024 and 2028. That's far less than supporters have suggested it could save.

The report also argues that the program would be dramatically underfunded by between $6 and $7 billion over its first five years.

The proposal would cost about $50 billion from 2024 through 2028, the report said. Funding sources could include $10 billion in available state funding, $19 billion from the federal government, $9 billion from employer contributions and $6 billion from those enrolling into the program.

The difference would have to be made up through a combination of higher employee contributions, smaller payment rates to health providers and higher costs to employers or enrollees in the proposed Health Securities Act, the report said.

Mary Feldblum, executive director of the Health Security for New Mexicans Campaign, which supporting the proposed legislation, argued it's important to remember the report is preliminary and could change. The report makes numerous assumptions in order to come up with its projections, she added.

Ortiz y Pino said he questions the report's findings. He argues it has several flaws he and other supporters intend to point out before a June 8 deadline for comments to the draft report. He said its biggest flaw is that it doesn't factor in savings from eliminating some of the costs associated with private health insurance.

"I just look at those numbers, and they don't make any sense to me," Ortiz y Pino said, noting two previous studies on universal health care projected billion-dollar annual savings to the state.

The newest of the last two studies is more than 10 years old, with analysis that came under different circumstances before the Affordable Care Act was implemented.

The report said the Health Security Act, if implemented, "would be the most ambitious state-based health reform ever carried out in the United States." The legislation also would make health care more affordable for low and middle-income families who would otherwise need private insurance, "and some segments of the private insurance market would likely disappear altogether."

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