State unveils New Mexico Health Care Authority transition

The department already provides services for hundreds of thousands of New Mexicans in behavioral health, child support enforcement, assistance for people living with disabilities, Medicaid, the Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families and more.

These services and others — including buying and governing health insurance plans for up to 180,000 state and local employees — will fall under the direction of the single Health Care Authority. State officials say the added purchasing power of a larger, unified agency will mean better benefits and lower costs.

"We're aiming high here," said Kari Armijo, current cabinet secretary of the Human Services Department, who will lead the new agency as it transitions into the Health Care Authority.

Armijo presented the transition plan to the state Legislative Health and Human Services Committee about two weeks ago, and though questions remain, Armijo said officials are working to iron out the specifics of how the plan will work.

"It's coming to the right home," Armijo said. "We need to get a lot of information so we can make some deliberate recommendations on how to move forward."

The move was predicated by the passage of Senate Bill 16 earlier this year, a measure directed by Gov. Michelle Lujan Grisham to revamp the Human Services Department into a more complete entity that would service everything from welfare benefits to child support enforcement along with the newly created division that would purchase health care plans for government employees.

Those employees include state and local employees, school employees and retirees, Armijo said.

"It's big and it's daunting," she added, "and the stakes are really high, and we take it really seriously."

Armijo said the move is not simply providing a new name for an established department but is "truly a reorganization. It's a transition to a healthier New Mexico."

The divisions the new Health Care Authority will govern affect more than half of the state's population, she said.

"The average person is an HSD customer, and so everything the agency does touches almost every New Mexican," Armijo said.

She said the state moved to consolidate health insurance coverage to leverage purchasing power for better employee premiums, co-pays and deductibles — costs that have dramatically risen in recent years.

"The health insurance we have is expensive, and the costs go up year after year," she said. "We tend to pass the costs onto employees, and I'd like to look at a way to manage the health benefits proactively rather than stifling utilization, which is what higher cost-sharing usually does. The target is to make it more affordable."

State Sen. Gerald Ortiz y Pino, D-Albuquerque, said he was pleased with the consolidation of health plan purchases.

"Ultimately I think it's going to be an advantage for the state," he said. "At first I thought they're rearranging the chairs and moving a couple of programs over, but as they fleshed it out now, it appears to have great promise."

Armijo said she is not yet sure how Medicaid Forward, a new sliding-scale plan that will insure people not currently covered by Medicaid, will fit into the new division.

"We're in the process of studying that and considering options for 2024," she said. "But that process is underway. I can't say exactly where we will land, but there will be some form of options."

Armijo said she is unsure if officials will develop a "Medicaid for all" plan or adjust the thresholds for incomes.

"We're optimizing every federal dollar that we can here in New Mexico for Medicaid so that's part and parcel of what we're trying to do," she added.

The authority will also focus on rural health care, Armijo said.

The agency's requested $12.9 billion budget includes a promise to increase the state's Temporary Assistance for Needy Families eligibility threshold up to 95% of the federal poverty rate, Armijo said. New Mexico's current eligibility rate is one of the lowest in the nation.

"We want to make sure the health care side doesn't dilute our other, very important mission of being the anti-poverty agency here in New Mexico," she said.

"It's hard to focus on your health care when you're trying to figure out where you next meal is coming from," she said. "We consider this part of an integrated health care system. Food is health care from our perspective. Financial security is health care."

Providing rural health care is a complicated issue, Armijo said, since rural providers tend to have high fixed costs but not the volume necessary for adequate reimbursement, making increased Medicaid payments to rural providers imperative.

"Medicaid is a big economic driver," she said. "In some communities, it's the only economic driver, so it's important to pay providers in these communities."

The state's rural health care grant fund will soon provide $80 million to assist rural health providers with start-up costs, she said.

"That's straight out the door to rural providers in behavioral health, primary care, transportation services and maternal health, and we've requested another $150 million for the fiscal year '25 budget, she said.

Sen. Martin Hickey, D-Albuquerque, suggested Armijo and other officials seek outside consulting services to complete the massive transfer of services. He estimated this would cost $5 to $6 million and said he would support it.

"It's one glaring missing piece. You've got to have an outside consultant that does transformation. You cannot do it yourself," Hickey said.

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