New Mexico: Medicaid buy-in Public Option on the horizon? (Update: Signed into law!)

UPDATE 2/27/23: Looks like the bill has made it past the first hurdle:

#hb400 #medicaidforward passed in the House Health and Human Services Committee with a 7 to 3 vote! #nmleg #nmpol #hb400

— New Mexico RCRC (@nmrcrc) February 27, 2023

UPDATE 3/01/23: I spoke with Nicolas Cordova of NM Together for Healthcare & he was able to fill in some additional context & details. The update was long enough that I decided to split it off into a separate blog entry.

UPDATE 3/8/23: HB 400 just overwhelmingly passed the New Mexico House!

HUGE NEWS! #HB400 just passed the House Floor by a vote of 58-10! Huge thanks to Rep. @reenaszcz & Speaker @JavierForNM for their work carrying #MedicaidForward through the House of Representatives & to everyone who reached out to their legislator. On to the Senate! #nmleg #nmpol 

— NM Together for Healthcare (@NMT4HC) March 8, 2023

UPDATE 3/17/23: BOOM: HB 400 just passed the New Mexico Senate along party lines (24-15, with 3 Senators abstaining or voting present).

While I believe this bill technically authorizes the program, in reality it mainly just authorizes a study & design of the program to be submitted by October 2024. After that, separate legislation would have to be passed in order to fund the new program before it could actually be implemented starting in January 2026.

Regardless, this is still a huge deal.

UPDATE 4/10/23: Gov. Lujan Grisham has signed HB 400 into law!

Original Story:

Thanks to Sarah Sifuentes of RALLY and Nicolas Cordova, Healthcare Director for New Mexico Together for Healthcare for their assistance in filling in some data & context in this piece.

Last week I noted that Minnesota is looking to transform their long-running Basic Health Plan program, Minnesotacare, into a low-cost public option of sorts by essentially removing the current 200% FPL income cap and opening it up for a buy-in to all Minnesotans who don't otherwise have healthcare coverage:

Lawmakers went to work Wednesday on a proposal to allow all residents to buy into the state-run MinnesotaCare health insurance program, not just low-income workers struggling to get by.

Democratic legislators and Gov. Tim Walz have been pushing for several years to expand MinnesotaCare into a low-cost “public option” for health insurance that would be available to everyone. Now that Democrats control both chambers of the Legislature and the governor’s office, expanding the program is one of their top priorities for the 2023 session.

...The administration of former Gov. Mark Dayton estimated in 2017 that removing the income cap could double enrollment in MinnesotaCare. Walz’s proposed budget for fiscal year 2024-25 includes nearly $21 million for expanding the program.

If it were to go through, it would actually be implemented starting in 2026.

Meanwhile, legislators and healthcare reform advocates in New Mexico are looking to do something similar...using Medicaid:

Medicaid Forward: Unlocking affordable coverage for all New Mexicans

A historic opportunity to continue New Mexico's leadership in healthcare affordability.

Medicaid Forward would allow residents whose incomes are too high to qualify for Medicaid to instead purchase an affordable plan through the program. Medicaid is a robust, comprehensive program that already provides high-quality care to nearly 50% of our residents. Expanding this simple and trusted system will make healthcare less expensive for people of all backgrounds.

Fifty percent? Well, according to the most recent Medicaid report from the Centers for Medicare & Medicaid Services, around 832,000 New Mexico residents were enrolled in Medicaid as of October 2022, plus another 50,000 or so children enrolled in the CHIP program, or around 882,000 total. New Mexico's total population is roughly 2.11 million people, so that's around 42% of the total state population.

However, New Mexico's Legislative Finance Committee put out a report last September which put total Medicaid enrollment at 47% of New Mexico's total population, with June 2022 enrollment hitting 976,000, so I'm n ot sure what to make of that. Medicaid enrollment is measured differently depending on the criteria used; sometimes it's a "point in time" snapshot, sometimes it's the average number over the course of a month, and some enrollees are eligible for "full service" Medicaid vs. only being eligible for certain services.

Medicaid enrollment has been growing every month during the COVID Public Health Emergency, so it's certainly possible that it's hit 45% or higher in New Mexico in particular since then. Of course, once the pending Medicaid Unwinding kicks into effect, tens of thousands of current Medicaid enrollees will start being kicked off the current plan, so that "nearly 50%" will probably drop somewhat. According to this op-ed supporting Medicaid Forward by the former medical director of La Familia Health in Santa Fe, estimates are roughly 100,000 NM residents could lose coverage via the "unwinding," or up to 5% of the total state population.

Regardless, the larger point is that this is still a huge portion of the NM population already covered by Medicaid, so why not open it up to the rest of the residents?

How will New Mexico pay for it?

Medicaid Forward is a good deal for New Mexico. New Mexico can raise its current Medicaid income limit and the federal government will still match nearly 73% of the costs. For the remaining costs, participants will pay for coverage on a sliding scale based on their income.

According to the Kaiser Family Foundation, the Federal Medical Assistance Percentage (FMAP) for Medicaid in New Mexico is 79.5% in 2023 for the non-ACA expansion population (roughly 532,000 people), and it's 90% for the ~300,000 ACA expansion enrollees. However, this includes a 6.2% FMAP "bump" via the COVID Continuous Coverage requirement, which is about to end; once it does, it will drop back down to around 73%. In 2024, the HHS Dept. puts New Mexico's non-expansion FMAP at 72.59%. I've also been informed that no federal waiver would be required for federal funding of the Medicaid Forward plan.

I assume that a chunk of the remaining cost would be covered by some of the state's recently-launched Healthcare Affordability Fund. While this funding currently goes towards enrollees in the state's private ACA exchange policies, if the Medicaid Forward plan goes into effect, I'd imagine many of those currently receiving financial assistance via ACA plans would shift over to the Medicaid buy-in plans, which in turn would free up some of the Affordability Fund money to cover that instead.

In addition, the NM Human Services Dept. will be studying whether expanding Medicaid could result in a significant cost savings via the shift of up to 103,000 public employees from their current self-insured status over to the new program. This is estimated to cost over $786 million this year, so it's possible that at least some of that would also be redirected into the Medicaid Forward program.

Who qualifies for Medicaid Forward?

Medicaid Forward would open Medicaid so every resident has access to affordable care. We envision a New Mexico where every person, regardless of their background or income, has the opportunity to live their healthiest life.

The actual legislation being discussed is New Mexico HB 400, State-Administered Health Coverage Plan. Here's the actual text of the bill (it's fairly short):

HOUSE BILL 400: 56th legislature - STATE OF NEW MEXICO - first session, 2023

INTRODUCED BY Reena Szczepanski and Javier Martínez and Siah Correa Hemphill and Leo Jaramillo

AN ACT

RELATING TO HEALTH CARE; ENACTING A NEW SECTION OF THE PUBLIC ASSISTANCE ACT TO ALLOW THE SECRETARY OF HUMAN SERVICES TO AMEND THE NEW MEXICO STATE MEDICAID PLAN TO CREATE A STATE-ADMINISTERED HEALTH COVERAGE PLAN; REQUIRING A STUDY ON THE FEASIBILITY OF IMPLEMENTATION; REQUIRING REPORTING; REQUIRING COLLABORATION BETWEEN THE HUMAN SERVICES DEPARTMENT AND THE OFFICE OF SUPERINTENDENT OF INSURANCE TO ENROLL INDIVIDUALS IN THE PLAN; MAKING AN APPROPRIATION.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. Section 27-2-2 NMSA 1978 (being Laws 1973, Chapter 376, Section 2, as amended) is amended to read:

"27-2-2. DEFINITIONS.--As used in the Public Assistance Act:

A. "department" means the human services department;
B. "board" means the human services department;
C. "director" means the secretary of human services;
D. "local office" means the county or district office of the human services department;
E. "medicaid advisory committee" means the body, established by federal law, that advises the New Mexico medicaid program on policy development and program administration;
F. "medicaid forward plan" means a health care coverage plan that leverages the medicaid program to provide a state-administered health care coverage option;
G. "public welfare" or "public assistance" means any aid or relief granted to or on behalf of an eligible person under the Public Assistance Act and regulations issued pursuant to that act;
H. "applicant" means a person who has applied for assistance or services under the Public Assistance Act;
I. "recipient" means a person who is receiving assistance or services under the Public Assistance Act;
J. "federal act" means the federal Social Security Act, as may be amended from time to time, and regulations issued pursuant to that act; and
K. "secretary" means the secretary of human services."

SECTION 2. A new section of the Public Assistance Act is enacted to read:

"DEVELOPMENT OF MEDICAID FORWARD PLAN.--

A. Subject to the appropriation and availability of federal and state funds, the secretary shall:

(1) amend the New Mexico medicaid state plan pursuant to the federal act to provide medical assistance by January 1, 2026 to residents who:
(a) are under age sixty-five;
(b) are not otherwise eligible for and enrolled in mandatory coverage or optional full medicaid coverage under the New Mexico medicaid state plan; and
(c) have a household income that exceeds one hundred thirty-three percent of the federal poverty level; and

(2) in consultation with the medicaid advisory committee and representatives of Indian nations, tribes and pueblos that are located wholly or partially in New Mexico, and consistent with the federal act, promulgate rules that:

(a) establish an affordability scale for premiums and cost-sharing based on household income for individuals eligible to enroll in the medicaid forward plan and offer discounted premiums and cost-sharing; provided that such financial assistance is, at a minimum, offered to individuals with household incomes below four hundred percent of the federal poverty level; and

(b) set the total amount of premiums to be assessed to medicaid forward plan enrollees, after an actuarial analysis, to ensure maximum access to coverage. Premiums imposed may be set at a level sufficient to offset the costs of health benefits under the medicaid forward plan and related administrative costs.

ACA Medicaid expansion covers people in households earning up to 133% FPL, although it's effectively 138% FPL due to a 5% income "disregard" in the ACA, so it sounds like the state would be providing sliding scale subsidies for enrollees earning between 138 - 400% FPL...presumably those earning more than 400% FPL would have to pay full price.

Of course, the presumption here is that Medicaid would still cost significantly less at full price than private insurance, due in large part to Medicaid reimbursing healthcare providers at a far lower rate than private insurance does. For instance, while Medicaid cost a median of $8,436/year per enrollee in 2019, in New Mexico specifically it was only $6,712/year...and for the Adult ACA expansion population (which is who I imagine the "buy-in" crowd would more closely resemble in terms of healthcare needs) it was only $5,931/year apiece.

Obviously this was 4 years ago, and by 2026 this will be higher yet, but the point is that it sounds like the average full price cost for comprehensive Medicaid coverage would've run around $494/month per person in New Mexico in 2019. By contrast, the average ACA exchange policy cost around $481/month that year...except that those plans only covered around 70% of the enrollees medical expenses on average.

Assuming New Mexico Medicaid is extremely comprehensive with nominal cost sharing, that means an apples to apples comparison with private individual market coverage would be roughly $494/mo vs. $687/mo...or ~28% lower. This is all back-of-the-envelope math, of course.

B. Consistent with the federal act and subject to the appropriation and availability of federal and state funds, the secretary may, in consultation with the medicaid advisory committee and representatives of Indian nations, tribes and pueblos that are located wholly or partially in New Mexico, promulgate rules that phase in coverage to all individuals described in Subsection A of this section.

C. The secretary shall consult with representatives of Indian nations, tribes and pueblos that are located wholly or partially in New Mexico to ensure that implementation and expansion of the medicaid forward plan promotes effective communication and collaboration, including information on participation in the medicaid forward plan.

D. The secretary shall promulgate rules consistent with and necessary to carry out the provisions of this section.

E. The secretary and the superintendent of insurance may seek any federal waivers necessary to administer the medicaid forward plan, provide the medicaid forward plan to additional persons and maximize federal dollars to ensure affordability for enrollees."

SECTION 3. A new section of the Public Assistance Act is enacted to read:

"STUDY OF THE MEDICAID FORWARD PLAN.--

A. The secretary, in coordination with the superintendent of insurance and in consultation with the medicaid advisory committee and representatives of Indian nations, tribes and pueblos that are located wholly or partially in New Mexico, shall study the medicaid forward plan's:

(1) effects on the individual, group and self-insured health insurance markets, including the New Mexico health insurance exchange and the health benefits programs provided to state or local public employees or public school employees, of providing mandatory or optional medicaid coverage to individuals who would otherwise be eligible for health insurance through those markets;

(2) effects on health care providers and health care facilities, including reimbursement rates needed to maximize access to health care services;

(3) operational needs for administering the medicaid forward plan, including staffing and technical needs for enrollment and collection of premiums or cost-sharing; (4) funding plan, including necessary expenditures and total revenue generated; and

(5) financial sustainability, including steps necessary for the department and the superintendent of insurance to apply for federal waivers to maximize federal funding and leverage those waivers to ensure affordability for enrollees in the medicaid forward plan.

B. By October 1, 2024, the secretary shall submit a report to the legislative finance committee and the legislative health and human services committee detailing the secretary's study of the medicaid forward plan."

Annnnd there it is: As I noted re. Minnesota's BHP Public Option proposal as well as other initiatives in Washington State, Colorado and Nevada, the crux of the matter is how much healthcare providers will be paid for providing services to what would presumably be a greatly expanded Medicaid population. Right now ~45% of New Mexico's population is being treated at existing Medicaid reimbursement rates.

Around ~21% are paying Medicare rates for most services. Some number of people are dual-eligibles, enrolled in both Medicare and Medicaid, and around ~10% aren't insured at all, leaving perhaps ~30% of the state population paying private insurance rates, which are considerably higher.

However, I've also been informed that New Mexico is already in the process of raising their Medicaid rates even prior to the Medicaid Forward plan--hospitals are scheduled to be reimbursed at the same rate as Medicare, while some other services are set to be reimbursed at 120% of Medicare rates...which means there would be a smaller gap to negotiate out of the gate once the program went into effect.

While it's unknown how many New Mexicans would either join the Medicaid buy-in option from private coverage or switch to it from their existing private insurance, any significant portion doing so would presumably cause those private reimbursement rates to go up further yet for the remaining portion of the population. Whether this is due to real-world costs (as the providers always claim) or if they'd just be using it as an excuse, I have no idea, but that would definitely be the big controversy.

SECTION 4. A new section of the Public Assistance Act is enacted to read:

"ENROLLMENT.--

A. The secretary and superintendent of insurance shall coordinate efforts and cooperate with the New Mexico health insurance exchange to establish:

(1) systems under which individuals may apply for enrollment in, receive a determination of eligibility for participation in and renew participation in medicaid, the medicaid forward plan or a qualified health plan offered through the New Mexico health insurance exchange; and

(2) consumer outreach programs to assist individuals with enrolling in medicaid, the medicaid forward plan and qualified health plans offered through the New Mexico health insurance exchange.

B. The secretary, the superintendent of insurance and the New Mexico health insurance exchange may coordinate efforts and cooperate to make the medicaid forward plan available for direct purchase through the New Mexico health insurance exchange platform.

C. The secretary, the superintendent of insurance and the New Mexico health insurance exchange shall promulgate rules consistent with and necessary to carry out the provisions of this section."

SECTION 5. APPROPRIATION.--Five hundred thousand dollars ($500,000) is appropriated from the general fund to the human services department for expenditure in fiscal years 2024 and 2025 to hire staff and contract for consulting and technical assistance to conduct the study described in Section 3 of this act. Any unexpended or unencumbered balance remaining at the end of fiscal year 2025 shall revert to the general fund.