This is the second — somewhat delayed — column on Medicaid. This column discusses Medicaid’s future in New Mexico.

The June 28 Patient Protection and Affordable Care Act (PPACA) decision by the Supreme Court makes the Medicaid issue even more timely and important.

Let’s start with a review of Medicaid’s importance and its basic structure. Medicaid matters for two major reasons. 

First, it provides about 560,000 New Mexicans with health coverage. Second, health care is the fastest growing part of New Mexico’s budget and Medicaid funding is the largest component of that item.   

Medicaid’s basic structure is a state administered/federally supported partnership. The Federal Government pays about 75 percent of New Mexico’s Medicaid costs and establishes basic enrollee eligibility and services. 

States can expand both eligibility and services within limits. New Mexico has expanded both eligibility and services.

Major national Medicaid issues are also New Mexico’s issues:

First, program complexity: New Mexico has about 40 different population/program groups with a myriad of regulations and funding rules for different subgroups. 

Second, the cost of care for aging populations: FY14 cost for a low-income elderly recipient in New Mexico is expected to be about $24,000/year vs. $3,200/year for a child. 

Third, the high cost of care for a small patient subgroups: nationally, 1 percent of recipients represent some 25 percent of Medicaid costs and New Mexico is probably similar. Some states report indivicual Medicaid patients costing more than $500,000/year.

Finally, the impact of PPACA: growth of Medicaid of an additional 100,000 to 150,000 enrollees by FY20 over currently projected growth if New Mexico opts into the PPACA Medicaid plan.

What is New Mexico doing? The Human Services Department has published the Centennial Care plan (see http://www.hsd.state.nm.us/Medicaid%20Modernization/) proposing Medicaid modernization in New Mexico. 

The plan describes four principles:

• First, a comprehensive service delivery system to assure recipients receive the right amount of care at the right time. 
• Second, involve recipients in the cost of their personal health decisions through a combination of rewards and cost sharing. 
• Third, payment reform to reward plans and providers who focus on outcomes rather than processes. 
• Finally, combining 14 of the 15 current federal waivers into a single waiver with consistent rules to simplify Medicaid administration.

If this plan is implemented, Medicaid recipients can expect to see (1) increased managed care and less fee-for-service and (2) a focus on aggressive case management of high cost and high risk enrollees. See http://www.newyorker.com/reporting/2011/01/24/110124fa_fact_gawande for an article describing “hot spotting”, the current term of art for such programs.

Project ECHO in New Mexico is focused on this issue for patients in rural areas (http://echo.unm.edu/)

These initiatives will be combined with (3) incentive programs and emphasis on health care “literacy” training for recipients and (4) increased use of home visits, especially pregnant women and newborns — 70 percent of the babies born in New Mexico are paid for by Medicaid.

Other initiatives may include the use of (5)“medical homes”, and (6) maximizing use of technology, especially for rural regions of the state. 

For a description of a current Medicaid pilot of “medical homes” (http://ahca.myflorida.com/medicaid/deputy_secretary/recent_presentations/medical_home_tf/medicaid_medical_home_task_force_report_020110.pdf)

Now, the next question — what’s the cost? Most states have been successful at controlling costs per enrollee, but the rapid growth in the number of enrollees, poor health of individual enrollees, and aging of enrollees have meant that health care is now the largest single item in most state budgets. 

This is not yet true in New Mexico, but only because of the way the State funds K-12 education.   

The FY13 general fund share of Medicaid costs is about $900 million. If New Mexico opts out of PPACA Medicaid expansion, the state share of Medicaid cost is projected to increase to about $1.19B/year (33 percent over FY13) by FY20.  

An estimated 250K-300K New Mexicans will remain uninsured. If New Mexico opts into PPACA Medicaid expansion, the state share of Medicaid cost is expected to increase to between $1.32B/year (46 percent over FY13) and $1.37B/year (52 percent over FY13) by FY20. 

An estimated 100,000 to 150,000 New Mexicans will remain uninsured. Under the opt-in scenario most PPACA cost increases hit the State in later years as the federal match for PPACA enrollees decreases. 

All FY20 numbers are estimates and, as everyone knows, such estimates are not particularly reliable.

Unfortunately, even the most optimistic scenario will leave an estimated 100,000 people without insurance — so don’t expect the indigent care tax increment to go away anytime soon.

Comments?  jhall@newmexico.com