With a financial impact analysis in hand, New Mexico legislators may be prepared to make a decision on a long-proposed near-universal health care program during their 2021 session. The Health Security for New Mexicans Campaign, led by Corrales’ Mary Feldblum, responded last month to a report by three consultants tasked to analyze cost-benefits inherent in the plan that would provide health care insurance equivalent to that enjoyed by state employees.
As Feldblum explained, the proposal is for state government “to set up its own health plan to ensure most New Mexicans, exclusive of the military, military retirees and federal retirees. “There is complete freedom of choice of doctors and hospitals, and services can be no less than what State employees have. (See Corrales Comment Vol. XXXVII No.20 January 5, 2019 ‘Health Security Act’ Could Pass N.M. Legislature.”)
The State’s contract with KNG Health Consulting, IHS Markit and Reynis Analytics produced analyses of four scenarios with various assumptions over the time period 2024 to 2028. Feldblum, who holds a doctorate in sociology and economics, pointed out that the analysis demonstrated that under the fourth scenario, implementation of the Health Security Act would yield substantial savings compared to what is now spent on health care in New Mexico.
Factored in were a wide range of costs, such as individuals’ insurance premiums, employer contributions and co-pays. “Possibly some Corrales Comment readers saw the Albuquerque Journal article on the consultants’ report. It emphasized what was called ‘a short fall,’ in revenues for the Health Security Plan.
“For Scenario 1, which is the one which got all the publicity, the consultant said there would be a short fall; there wouldn’t be enough revenue to pay for the cost of the plan.” But that is because of anticipated start-up costs, Feldblum said. Under Scenarios 2 and 3, the revenue-to-cost ratio shrinks, and under the fourth scenario, “there is no shortfall at all.”
She said the Journal article did not explain that scenarios studied showed less and less shortfall. “When you just look at short falls over a five-year period, from 2024 to 2028, you’re missing something. Why is there a shortfall in 2024 and not in 2028?
“The point is, when you start up a new program, you’re always going to have some added costs in the beginning.” Feldblum said she has problems with the consultants’ analysis, “but what’s important is that in every single scenario, they saw the short fall diminished and in one case, the short fall didn’t occur at all.” The report makes it clear state government will save administrative costs with Medicaid being rolled into the Health Security plan. Another significant cost reduction derives from bulk purchase of drugs.
She submitted a 35-page critique of KNG’s preliminary 65-page draft report. “They corrected some things, but the analysis still has some major, major problems. But this is a big undertaking for any think-tank to be able to project a change that would come from something like the Health Security Act.
“So I’d like Corrales residents to keep in mind that in 1965, when Medicare was introduced in Congress under President Lyndon B. Johnson, the numbers-crunching was very weak. It had never been done before, yet they proceeded. And 55 years later —with lots of changes, of course— it’s still a very popular program that serves a critical need.
“So while focusing on numbers is important so that you have some sense of where you’re navigating… I’m not convinced that KNG is navigating in the right way… but there’s enough in there that ultimately they admit we’re going to spend less under Health Security than we would under the current system.”
The question now, Feldblum posed, “is do we start this process now? Do we start setting this up in the next session of the legislature? “We know that in a state with a small population it makes sense to start our own health plan.” She cited two previous studies on the implications of the Health Security plan, one in 2004 and the other in 2007; neither indicated any funding short fall.
“We know this is do-able. Under the current system, the problems are enormous, as we all know. Hospitals that were fragile before COVID-19, many of them are almost bankrupt now. We’re seeing premiums go up and people’s out-of-pocket costs are going up. It just doesn’t make sense to be dividing everybody into these small, different insurance pools. Doctors are frustrated. We have more and more physicians who are interested in the Health Security Act. They’re fed up with the IT systems that have nothing to do with quality of health care, but everything to do with whether they will get paid by insurance plan A or B or C or D or E, F or G.
“It’s an immensely complex system and we have a chance in New Mexico to do something different. There are over 170 organizations… farmers and ranchers, health providers and all kinds of community organizations that have endorsed this. There are 37 county and municipal governments who support this, even Roswell.” Public pressure will determine whether the 2021 session of the N.M. Legislature launches the Health Security plan, Feldblum said. “There is enough evidence to show that we need to go down this path. We have to do it slowly and carefully.”