Medicaid agency seeks less money in NM next year

September 24, 2013 • State News

SANTA FE, N.M. (AP) — The agency managing New Mexico’s largest health care program is asking for less — not more — state money to operate in the upcoming budget year.

It’s the first time in more than a decade the Human Services Department isn’t seeking an increase in state aid for Medicaid, which provides health care for a fourth of New Mexico’s population.

Agency officials said a reduction is possible in part because of low price inflation, more available federal money and lower usage of services by Medicaid recipients.

“I hope people see it as a good thing. It’s not as though we’re cutting services or changing anything. It’s really just something that we’ve been able to manage a little bit differently,” said Deputy Secretary Brent Earnest.

The department has requested about $1 billion in state money for Medicaid in the fiscal year that starts next July. That’s [auth] nearly $19 million, or 1.8 percent, less than this year.

Agencies submitted budget requests to Gov. Susana Martinez’s administration at the start of the month and those will be used to develop the governor’s spending recommendations to the Legislature, which meets in January to approve a state budget for next year. Lawmakers also review the agency requests in making budget decisions.

The Medicaid agency’s proposed budget reduction is notable because the state plans to expand the health care program starting in January. Nearly 90,000 uninsured New Mexicans are expected to enroll next year under terms of a federal health care overhaul championed by President Barack Obama.

The federal government will pick up the full costs of the expansion initially and that will gradually drop to 90 percent in 2020. The total costs of Medicaid — federal and state spending — are expected to increase by about $670 million next year because of the expansion, according to the Legislative Finance Committee.

Rep. Luciano “Lucky” Varela, a Santa Fe Democrat and committee chairman, said a lower budget request from Medicaid potentially frees up state money that can help lawmakers in making spending decisions for the rest of government. Historically, public education and Medicaid have driven much of the growth in state spending.

“There seems to be some savings there,” Varela said of Medicaid, “and that’s the reason we’re somewhat optimistic that we’re going to have a good base budget and that the larger agencies are not going to be requesting as much money as they normally do.”

He said the committee could end up proposing to the Legislature an overall state spending increase of 4 percent to 5 percent next year.

Excluding the Human Services Department, the rest of government — the judiciary, some legislative operations and general government agencies — has requested a spending increase of about 7 percent next year, according to an LFC staff analysis. That doesn’t include financing for public schools and colleges, however.

If the Medicaid agency is included, the overall budget increase requested by agencies is about 3.6 percent next year. But that masks smaller agencies that are seeking much higher increases than the largest departments.

Not counting the Human Services, Corrections, Health and Public Safety departments, other government agencies are seeking an 11 percent increase in spending.

The governor’s top budget official, Finance and Administration Secretary Tom Clifford, said the agency requests provide a “reasonable starting point” to prepare a blueprint for financing government next year. A number of agencies, he said, are seeking extra state aid to offset losses in federal aid or to make up ground from state cuts during the recession.

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