Spending on Social Welfare Programs in Rich and Poor States. Final Report.. Other Federal Social Welfare Programs

07/01/2004

When research staff interviewed state officials for this project in September 2003, many cited New Mexico's growing Medicaid program as the most pressing issue for the state's social welfare programs. In 2002, Medicaid was one of the largest programs in the state budget, second only to k-12 education spending. In that same year, the program provided health care coverage to one of every five people in New Mexico. The state's general fund spending for Medicaid increased 55 percent from $263 million in 2000 to $407 million in 2004. During that period, New Mexico's Medicaid costs periodically exceeded projections in enacted budgets requiring additional appropriations during the state fiscal year. State officials noted that the cost drivers for New Mexico's program are the same as the rest of the nation including pharmacy costs, personal care services, facility based services, and others. Several officials indicated that New Mexico has not kept pace with others states in instituting measures to control Medicaid costs.

According to Governor Richardson's 2005 executive budget proposal (Richardson took office in January 2003), "without additional cost containment measures and revenue enhancement measures in SFY 2005, the New Mexico Medicaid program will require $115 million of General Fund over what is required for SFY 2004. This increase is greater than the current consensus revenue estimate of increased General Fund revenue for all of state government in SFY 2005." The executive proposal recommended a $54.7 million increase in state funding for Medicaid; $25.7 million in revenue enhancements including bed assessments for nursing homes and hospitals, and increasing the medical insurance premium tax from three to four percent; and cost saving strategies such as a reduction in benefits, increased co-payments, and re-certifying program eligibility every six months rather than every 12 months. Governor Richardson's proposals to increase the premium tax and assess a surcharge on nursing home and hospital beds were passed by the 2004 Legislature and signed by the governor.

Governor Richardson is also spearheading an effort to reform the state's healthcare system to extend coverage to the uninsured through a pooling system. Also noteworthy are the administration's efforts to consolidate children's behavioral health services, which include collapsing funding from many sources for multiple services into one "super" request for proposals.

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