Lawmakers approve $17 million plan to shield New Mexicans from health insurance hikes

In a special session this week, the state Legislature passed a bill intended to alleviate some of the sticker shock New Mexicans may face when they see the increases to the cost of their marketplace health insurance plans next year.

House Bill 2, which passed Thursday with bipartisan support, will cover the gap left by Biden-era tax credits that made Affordable Care Act premiums more affordable for households with incomes over 400% of the federal poverty level. The tax credits will expire at the end of the year unless Congress opts to renew them.

After the bill is signed by Gov. Michelle Lujan Grisham, it will go into effect immediately, before New Mexicans receive their health insurance renewal notices on Nov. 1, said House Majority Leader Reena Szczepanski, D-Santa Fe, the bill's co-sponsor.

"I think families are really nervous about the rising cost of premiums for health insurance," Szczepanski said in an interview. "I'm really proud that we were able to act."

When the tax credits expire at the end of the year, New Mexicans will be saddled with some of the highest ACA rate increases in the country, according to a Journal analysis of marketplace data compiled by health policy nonprofit Kaiser Family Foundation. Premiums will increase by an average of 35.7%, per the state Office of the Superintendent of Insurance.

Without the subsidies, an Albuquerque couple nearing retirement age with a combined annual income of $84,600 would see a 311% increase in their monthly ACA premiums, according to marketplace data. The couple would spend $2,462 a month — or 35% of their total income — on their marketplace coverage. With the subsidies guaranteed by HB2, their monthly health insurance cost will be around $600, per BeWell.

The BeWell marketplace is where New Mexicans who do not qualify for Medicaid or Medicare and do not have coverage through their jobs can buy health insurance via the ACA, commonly known as Obamacare.

Unlike Medicaid, which is for low-income Americans, the ACA serves mostly middle-class households. About half of the adults with health insurance through the ACA marketplace are small business owners or employees, or are self-employed, according to KFF.

Around 75,000 New Mexicans buy health insurance through the BeWell marketplace, according to state officials, and about 6,500 people are receiving federal premium assistance that is set to expire at the end of the year, Szczepanski said.

"We're going to see some people being forced to drop insurance coverage due to the high cost," she said. "I think we put a serious dent in that with this bill."

Democrats and Republicans in Congress remain at odds over whether to let the ACA tax credits expire. The issue has become a sticking point in the federal government shutdown, which is ongoing as of Thursday.

New Mexico, Szczepanski said, is one of the only states planning to cover the cost of the lost credits.

The subsidies will cost the state $17 million from the Health Care Affordability Fund for one fiscal year, but Albuquerque Democrat Sen. Antoinette Sedillo Lopez told legislators the aid would pay for itself if it meant New Mexicans got to keep their health insurance.

"While this does have some cost to the state for the future, it also has some savings," Sedillo Lopez said. "When people forego health insurance and have to wait until they have to go to the emergency room to deal with catastrophe, it's actually more expensive."

The bill received support from both sides of the aisle. It passed in the House with a vote of 49-13 and in the Senate with a vote of 34-3.

Some Senate Republicans expressed concern about an increase in state spending under the bill, and advocated for the legislation to include an income cap for the subsidies rather than a sliding scale.

The votes against the measure in the Senate included Senate Minority Leader William Sharer, R-Farmington, who said the legislation didn't offer any permanent solutions to New Mexico's health care crisis.

"I'm not convinced that this is the right path, not because I lack compassion," Sharer said.

Lujan Grisham called the special session of the Legislature, which started Wednesday and ended Thursday, to address some of the repercussions of the cuts from the Trump administration's "One Big Beautiful Bill" on an emergency basis.

After the House adjourned Thursday evening, House Speaker Javier Martínez, D-Albuquerque, told reporters that lawmakers intended to continue exploring more permanent solutions in the upcoming January session.

"These are temporary fixes," Martínez said.