by Nick Estes
December 13, 2011

Federal health care reform (the Patient Protection and Affordable Care Act of 2009, or ACA) will provide health insurance to an estimated 315,000 previously uninsured New Mexicans. In doing so, it will bring billions of new federal dollars into our state’s economy, creating many new jobs, and generating over $1 billion in new state and local tax revenue by 2020.

Beginning in 2014, Medicaid will expand to cover almost all low-income New Mexicans under age 65. The New Mexico Human Services Department projects that by 2020 New Mexico will have added between 133,000 and 183,000 new Medicaid enrollees. These will primarily be adults who were previously unable to afford health insurance. Also beginning in 2014, the state will have a new health insurance exchange where individuals who earn too much to be eligible for the new Medicaid coverage will be able to purchase private insurance. They will receive sliding-scale federal financial assistance to help pay for their insurance.

The new federal dollars flowing to New Mexico health care providers will generate billions more in economic activity, creating tens of thousands of new jobs and raising about $1billion in new state tax revenue—far more than the state’s share of the cost of implementing ACA. The more aggressive the state is in expanding health care to uninsured New Mexicans, the greater the health and economic benefits to the state.

The table below is a summary of the estimated economic effects of implementing PPACA in the state of New Mexico during the first seven years (2014-2020). As the table shows, the new state tax revenue created by all of this new economic activity will more than pay for the new spending required by the state for Medicaid expansion.

These data are set forth in greater detail in two reports by New Mexico Voices for Children released in August of 2011: The Economic Benefits of Health Care Reform in New Mexico and The Tax Revenue Benefits of Health Care Reform in New Mexico.

Covering so many more people with health insurance will have tremendous benefits, not only in terms of better medical outcomes and quality of life but for our state’s economy. New Mexico has a very high rate of residents without health insurance, and that means our health care providers have a great deal of uncompensated medical costs. Much of this cost is shifted to those who do have private insurance—adding $2,300 to the average New Mexico family’s health insurance premium every year. New Mexico has the highest cost shifting in the country.

Our high cost shifting is an effective economic development disincentive for the Land of Enchantment. Who is going to want to create high-wage jobs here knowing that their health insurance costs will be on an unsustainable upward trajectory? The ACA is the only thing on the horizon that will help with this, by getting most New Mexicans insured so their health care costs aren’t passed along to businesses that provide health insurance.

New Mexico was just awarded a $34 million federal grant to establish the state health insurance exchange. This is a great step forward, and we hope the state will aggressively implement health care reform to really benefit our state’s health and economy.

Nick Estes is NM Voices’ Deputy Policy Director.

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