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Las Cruces TV interview: Preview of 2017 legislative session

Paul Gessing was recently in Las Cruces and sat down with Fred Martino of KRWG TV to discuss some of the issues that Rio Grande Foundation is working on and some of the issues facing our State in the 2017 legislative session.

The interview is about 15 minutes and can be found here:

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Economy Health Care Local Government Tax and Budget Taxes Top Issues

UNM Hospital no longer needs (as much of) your money

Every eight years, the University of New Mexico Hospital must ask Bernalillo County voters to renew their property-tax mill levy. The tax raises approximately $95 million per year and costs the owner of a $200,000 home between $300 and $400 annually.

The median overall property tax burden on a $200,000 home in Albuquerque is $2,698, so UNMH claims a significant proportion of your property-tax bill.

And while the hospital claims, rightly, that your tax burden won’t increase if the levy is renewed, the fact is that public-policy conditions have changed that should allow the hospital to require less of county residents’ hard-earned money.

A big portion of UNMH’s mission is “indigent care.” That means providing services for the uninsured and others who can’t pay for their own health care. But since the last mill levy passed, Obamacare took effect, with a primary mission of “insuring” indigent care via a massive expansion of Medicaid.

Whether you think Medicaid expansion was a good decision or not, UNMH has seen indigent care needs drop dramatically. In 2013, UNMH served approximately 27,000 county residents. UNMH is now serving less than half the uninsured county residents it did in 2013.

So why is UNMH requesting the same mill levy for a rapidly declining number of uncompensated-care cases? Perhaps it assumes that voters will blindly go along with yet another feel-good scheme to separate them from their money?

Voters should carefully consider not renewing the mill levy – and instead, force UNMH to come up with a different, smaller ask in the future. After all, it isn’t as if we’re not paying for Medicaid expansion already.

As federal taxpayers, we have been funding – and borrowing money to fund – Medicaid expansion for years. But over the next five years, New Mexicans will be on the hook for a bigger portion of the overall bill: $778 million, to be exact.

We know how bad our economy is. What no one knows is how we’re going to pay the huge new bill for Medicaid expansion.

Perhaps more troubling, as far as UNMH is concerned, is why a government-owned entity with a core mission that includes indigent care advertises its services. The Rio Grande Foundation requested data for the calendar years 2014, 2015, and 2016, and found the hospital spent $1.3 million over that time period on advertising.

Yes, the U.S. Postal Service, which like UNMH, is government-owned, advertises, but that doesn’t make it right or necessary. (And at least the post office charges its customers.) Why spend hundreds of thousands annually to tout that UNMH exists and that it is New Mexico’s “only Level I Trauma Center?”

UNMH already has a website set up in support of the mill levy. The deck is always stacked against those who oppose publicly funded entities in campaigns to either raise taxes or keep the tax revenue flowing in.

To the extent that any grass-roots opposition to the UNMH mill levy forms, it will be outspent dramatically. Amazingly, the hospital’s annual advertising budget far exceeds the annual budget of the Rio Grande Foundation.

There is nothing new about the forces of limited and responsible government being outspent, but with the amount and cost of indigent care on the decline, shouldn’t Bernalillo County residents have a fully informed debate about the UNMH mill levy before Election Day?

D. Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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Economy Health Care Local Government Notable News Research Tax and Budget Taxes Top Issues

Bernalillo County Voters Should be Skeptical of UNMH Mill Levy

Every eight years, University of New Mexico Hospital (UNMH) must ask Bernalillo County voters to renew the Hospital’s Mill Levy. Bernalillo County imposes a mill levy for the Hospital at a rate approximating 6.400 on both residential and non-residential property in the County. This money is used to fund Hospital operations. Initially, $95 million will be collected annually although the exact number will fluctuate based on property values and economic conditions in the County. The trend <em>should </em>be upwards, however.
<ul>
<li>As of June 2016, UNMH served <strong>6,812</strong> uninsured county residents. If that trajectory holds through December that would mean the Hospital will serve 13,624 uninsured patients in 2016.</li>
</ul>
In 2013, UNMH served <strong>approximately 27,000 county residents. </strong>UNMH is now serving less than half the uninsured county residents as they did in 2013.

New Mexicans are paying the bills for both the ObamaCare Medicaid expansion that is reducing those “uncompensated care” rates, but UNMH wants to continue taking hundreds of dollars from both commercial and residential property owners throughout Bernalillo County <strong><span style=”text-decoration: underline;”>for another eight years!</span></strong>

As the Rio Grande Foundation’s Paul Gessing argues <a href=”https://www.riograndefoundation.org/downloads/rgf_unmh_mill_levy.pdf”>in a new issue brief</a>, voters should consider sending UNMH “back to the drawing board” for a smaller mill levy that reflects the falling costs of uncompensated care. The image below illustrates how the current UNMH mill levy impacts at least one property owner’s tax bill.

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Health Care Notable News Top Issues

New Mexico’s behavioral healthcare system needs new thinking

That’s the conclusion of research our organization has conducted on the public revenue and resources dedicated to fighting substance abuse and mental disorders in the Land of Enchantment.

Certainly the crisis is severe. Alcohol-related deaths are rampant. The drug-overdose rate remains among the highest in the country. More citizens here have mental illnesses than the national average, and the prevalence of suicide is greater here than in all but three states.

But what’s more depressing than the reality of the behavioral-health epidemic is state government’s inconsistent and failure-ridden attempts to address the problem.

In 2002, “Behavioral Health Needs and Gaps in New Mexico,” an investigation commissioned by the Legislature, concluded that there was “no identifiable behavioral health system leader with responsibility or authority across the behavioral healthcare systems in the state.” In addition, the “benefit packages of the various behavioral health systems within New Mexico” were “not organized to maximize available resources or to provide incentives to providing care that has been proven to be effective (evidence-based or promising clinical practices).”

In response to the report, legislators and then-Gov. Bill Richardson created the New Mexico Behavioral Health Purchasing Collaborative, overseen by the Human Services Department, to bring leadership, focus, and accountability to the state’s public system of behavioral healthcare. But reports by the Legislative Finance Committee have repeatedly found that the collaborative hasn’t performed nearly as well as its creators hoped.

Even worse, radical policy shifts — including “carving out,” then “carving in” behavioral-health services for Medicaid recipients, and the brutal, partisan fight over Gov. Susana Martinez’s 2013 suspension of Medicaid payments to nonprofit providers due to suspicions of fraud — have taken a heavy toll.

No one can change the mismanagement and chaos of the past. The goal now is to move forward with sound principles and policies. A good place to start is with the flawed assumption that the only thing wrong with New Mexico’s behavioral-healthcare system is a lack of revenue.

Our examination found that states with high-performing systems do not necessarily spend more on substance abuse and mental illness. The key is to use what funding is available in the most effective ways possible. In 2014, legislative researchers found that the state spent just “11 percent of its … funding on proven and effective (behavioral-healthcare) programs for adults, even though past studies have recommended greater spending on these services.”

An expansion of mental-health courts would be a wise investment. Diverting an offender with behavioral issues from jail is an early intervention measure proven to be effective. Columbia University’s Paul S. Appelbaum wrote that most recent research shows that participation “is associated with reduced rates of rearrest and reincarceration compared with ordinary handling by the courts and correctional system.” Mental health courts exist in the Albuquerque-Santa Fe region, but not elsewhere in the state. Otero County is exploring a court of its own, and others should follow.

For those with a chronic condition who refuse help despite multiple arrests and/or hospitalizations, a stronger approach is need. Assisted outpatient treatment is a court-ordered plan that can include medication, tests, therapy, training or counseling. In the words of the Treatment Advocacy Center’s Brian Stettin, that type of treatment “leads to reduction of hospitalization and criminal acts,” and reduces the number of “people … getting treated in jails or prison for mental illness.”

New Mexico adopted AOT earlier this year, but was one of the last states to do so. However controversial the process remains, it’s now incumbent upon local governments and the courts to use the tool to help behavioral-health sufferers and taxpayers alike.

Finally, New Mexico’s behavioral-health workforce is inadequate — a harsh reality exacerbated by the governor’s decision to expand Medicaid under Obamacare. For fiscal and economic reasons, there is little chance for a quick turnaround. But training public employees in mental health first aid, and expanding the state’s system of peer support, can help compensate for an insufficient number of professional caregivers.

Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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Health Care Notable News Research Top Issues

NM Behavioral Health System Can, and Must, Be Reformed

ALBUQUERQUE — New Mexico’s behavioral-healthcare system is in crisis. This is widely acknowledged. The administration of Gov. Susana Martinez took dramatic steps in 2013 when she suspended Medicaid payments to nonprofit providers due to suspicions of fraud. Right or wrong, this move set up partisan infighting that continues to this day.

Certainly the crisis is severe. The drug and alcohol related death rates are twice the national average. More citizens have mental illnesses than the national average, and the prevalence of suicide is greater in the Land of Enchantment than in all but three states, and rising.

But what’s more depressing than the behavioral-health epidemic is the state government’s inconsistent and failed attempts to address the problem. A new Rio Grande Foundation policy paper, “Healing Minds, Helping Taxpayers Reforming Behavioral Healthcare in New Mexico” outlines the issue and offers real-world solutions to the problem.

  • The Behavioral Health Collaborative has failed. Get rid of it.
  • States with high-performing behavioral health systems do not necessarily spend more on substance abuse and mental illness (besides, New Mexico does not have more available to spend). The key is to use what funding is available in the most effective ways possible.
  • An expansion of mental-health courts would be a wise investment. Diverting offenders with behavioral issues from jail to the mental health care system is proven to be effective.
  • For those with a chronic condition who refuse help despite multiple arrests and/or hospitalizations, a stronger approach is need. Assisted outpatient treatment is a court-ordered plan that can include medication, tests, therapy, training, or counseling. In the words of the Treatment Advocacy Center’s Brian Stettin, AOT “leads to reduction of hospitalization and criminal acts,” and reduces the number of “people…getting treated in jails or prison for mental illness.”
  • Finally, New Mexico’s behavioral-health workforce is inadequate – a harsh reality exacerbated by the governor’s decision to expand Medicaid under Obamacare. Training public employees in Mental Health First Aid and expanding the state’s system of peer support can help compensate for an insufficient number of professional caregivers.

“Reforming behavioral healthcare in New Mexico will be a long process,” said D. Dowd Muska, the Rio Grande Foundation’s research director. “But the kind of thinking that brought so many failures in the past shouldn’t be employed to forge a new strategy to combat substance abuse and mental disorders. The taxpayers and recipients of behavioral health services alike deserve more effective options.”

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Economy Health Care Notable News Research Tax and Budget Top Issues

Long Term Care Reform Could Provide Additional Budget Savings for New Mexico

ALBUQUERQUE — New Mexico policymakers will meet in Santa Fe later this month to address major budget deficits. The Rio Grande Foundation has previously outlined several specific ideas for policymakers, but none of New Mexico’s political leaders have outlined a detailed plan to address the issue to date.

In this brief, “Long Term Care: Much-Needed Cost-Savings for New Mexico,” the Rio Grande Foundation and the Center for Long-Term Care Reform add another potential area of cuts to the mix totaling as much as $100 million in savings to New Mexico in the area of Medicaid.

These cuts should appeal to both Democrats and Republicans alike. For Democrats, it is worth noting that reforms to Long-Term Care under Medicaid would reduce Medicaid’s generosity towards affluent senior citizens looking to shield their assets. For Republicans, $100 million in savings would contribute significantly to making good on Gov. Martinez’s efforts to close the budget deficit without raising taxes.

As discussed in the brief, Gov. Martinez and the HSD should work with the state legislature and the federal CMS to:

(1) Cut the home equity exemption to the federal minimum (currently $552,000);

(2) Maximize estate recoveries to bring in an extra $5 million per year in non-tax revenues;

(3) Curtail long-term care financial eligibility loopholes wherever possible, and

(4) Educate the public that long-term care is a personal responsibility for which everyone one needs to plan, save, invest or insure.

(5) Promote the state’s Long-Term Care Partnership Program

While reforming long-term care presents a current opportunity at Medicaid savings, absent reforms, it is another area that could have dramatic, negative impacts on New Mexico’s budget. Long-term care costs skyrocket after age 85. New Mexico’s 85-plus population is only two percent now (28th nationally), but it’ll be three percent (10th) by 2032, about when their Trustees say Social Security and Medicare will become insolvent.

Concluded Paul Gessing, president of the Rio Grande Foundation, “New Mexico policymakers face some tough decisions in closing the gaping budget gap, but ending the fleecing of taxpayers by the Medicaid planning industry should be an easy move.”

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Economy Health Care Local Government Top Issues

Viewpoint: Sick leave mandate would be another blow against young workers

Proponents of the mandatory sick leave ordinance are touting the benefits of yet another new local government mandate. The City’s elevated minimum wage is apparently not luring Millennials to town. Now, mandatory sick leave is being put on the ballot for consideration this fall.

The economic issues faced by this City/State are the result of too few jobs. Low wages are the result of plentiful low-skilled labor. Both data and anecdotes bear this out.

New Mexico’s unemployment is 6.2 percent, second-highest in the nation (as of June). Earlier this year, 10,000 people applied for 290 jobs at the Cheesecake Factory (a chain restaurant). Piling more rules and regulations upon businesses and job creators will result in fewer jobs for young people.

A new study using data from Connecticut backs up that claim. Connecticut adopted mandatory sick leave in 2012. The report by Dr. Thomas Ahn of the University of Kentucky is the first to examine multiple years of Census Bureau data (2012-2014) on the impact of Connecticut’s first-in-the-nation state paid sick leave law.

To isolate the effects of the paid sick leave law, Dr. Ahn compares Connecticut to the five surrounding New England states, and controls for other relevant economic factors that might be responsible for changes in employment.

Dr. Ahn finds that the fraction of employees working at companies with paid sick leave benefits rises from virtually zero at ages 18 to 20 to about 70 percent for workers in their mid-30s and above. He thus expects a new benefit mandate to have the greatest potential for negative impact on younger employees, who are less likely to have the benefit currently.

Among his findings:

Younger employees in Connecticut aged 20-34 saw a 24-hour reduction in annual hours worked. For a part-time employee in the service industry, that’s the equivalent of roughly one lost week of work per year. These employees lost $850 per year in annual income, the equivalent of 3.5 fewer pre-tax paychecks for someone working part-time at the state’s minimum wage.

There are also other consequences to consider: In forthcoming research, Dr. Ahn and his colleague Dr. Aaron Yelowitz find that recent paid sick leave policies in the United States have increased employee absenteeism by 1.2 days per year. Notably, these absences do not tend to occur in times of the most severe influenza outbreaks—suggesting that employees may be using the benefit even when they’re not sick.

There is no doubt that sick leave is a nice benefit to have. However, a one-size-fits-all mandate imposed from the date of hire is the wrong approach. After all, businesses are clearly willing to offer sick leave as a benefit especially as workers gain skills and time in the workforce.

This mandate is not flexible. It will make jobs and job experience further out of reach for young people, especially those in part-time jobs working their way through college. Tracking will be a nightmare as will be the potential legal issues it thrusts upon employers. Ultimately, another mandate is exactly what this community needs if the goal is to push more young people and businesses into Texas and out of New Mexico.

Paul Gessing is the President of New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility

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Economy Health Care Notable News

Medicaid in New Mexico Needs a Long-Term Fix

The following op-ed ran in the Carlsbad Current-Argus on May 8, 2016.

New Mexico has a “Dr. Abernethy” problem.

In 2014, The Wall Street Journal explored the ways that Obamacare’s expansion of Medicaid was “straining some health-care systems that already don’t have enough doctors and staff” and challenging “medical practices’ bottom lines in ways that lead them to turn some away.”

Reporter Louise Radnofsky described how Dr. Holly Abernarthy, a family practitioner in Farmington,

has turned away all newly eligible Medicaid beneficiaries because she can’t sustain her practice expenses if her proportion of Medicaid patients grows much beyond her current 13 percent.

For a moderately complex office visit, she is paid about the same as [a] nurse practitioner: about $80 from Medicaid and about $160 on average from commercial insurance.

Says Dr. Abernethy, “I would love to see every Medicaid patient that comes through my door. If you give people coverage, they should be able to utilize it.” But making it work would extend her workday, and “I have three small children and I miss them.”

A year and a half later, things are about to get a whole lot worse for Dr. Abernethy — and her colleagues.

The New Mexico Human Services Department is preparing to implement the legislature’s mandate that it “reduce reimbursement rates paid to Medicaid providers.” The healthcare bureaucracy’s plan does not impact prevention or obstetrics, but cuts for inpatient, outpatient, and dental services would range from 1 percent to 8 percent. As the Associated Press noted, the “University of New Mexico Hospital would see the steepest reimbursement reductions — 8 percent for inpatient services and 5 percent for outpatient.” Previously “enhanced” rate for uncompensated care at 29 state hospitals would be reversed.

Why all the cuts? Medicaid, expanded by Governor Martinez under Obamacare, is spewing a river of red ink. It’s projected to generate a deficit of $417 million in the 2016 and 2017 fiscal years. And the future is likely to be even darker. By 2020, the state estimates that 43 percent of New Mexicans will be signed up for “free” healthcare.

Last year, the legislature’s Health and Human Services Committee asked the Rio Grande Foundation to provide an analysis of Medicaid’s costs and benefits in the Land of Enchantment. Paul Gessing, our organization’s president, explained to legislators that nationally, “over half of providers no longer accept Medicaid patients,” and of the “doctors who do accept Medicaid, the provider networks are narrow and nearly one-third face wait times of over a month.”

The committee’s far-left members assured us that such conditions don’t prevail in New Mexico. Except … they do. A recent investigation by the Legislative Finance Committee uncovered average Medicaid wait times “from three weeks to nearly two months,” as well as “significantly fewer [primary care providers] accepting new Medicaid patients than has been reported by the [managed care organizations].”

With reimbursements about to decline, look for even longer wait times and more providers denying services to Medicaid patients. It’s Econ 101 — a subject the proprietors of New Mexico’s taxpayer-funded healthcare empire consistently flunk.

Another inconvenient reality willfully ignored by Medicaid’s fans: the research consistently showing that the program generates less-than-impressive outcomes. In Oregon, where Medicaid was broadened prior to Obamacare, a sweeping study concluded that expansion “produced no statistically significant effects on physical health.”

Ineffective and outrageously costly, Medicaid is an albatross around the necks of taxpaying New Mexicans. It’s time for the state to reverse its disastrous expansion. Such a return to fiscal sanity is possible. In the words of the Foundation for Government Accountability’s Jonathan Ingram, options include the elimination of “Medicaid expansion eligibility, effective on a specific date,” or a freeze “at current levels,” allowing “enrollees [to] cycle off as their conditions improve.” Next up: A lobbying effort with other states to implement meaningful, market-oriented reforms of a program that has gotten completely out of control.

Tinkering with reimbursement rates can cut costs in the short run, but it’s no long-term solution to New Mexico’s Medicaid mess. Policymakers need to think bolder, and bigger.

D. Dowd Muska (dmuska@riograndefoundation.org) is research director of New Mexico’s Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.

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Economy Health Care Open Government

Study ranks New Mexico poorly on ease of access to doctors’ information

Do you want to find out if your doctor has been disciplined by the medical board, the feds, or has faced a high number of malpractice cases? In New Mexico, you may be out of luck. Of course, we at Rio Grande Foundation (like Milton Friedman before us) had little use for government-mandated professional licensing.

Recently, I sat down with KRQE Channel 13 to discuss a new report from Consumer Reports that ranked state medical licensing boards on their public disclosure on websites etc. of information relating to disciplinary actions taken against doctors as well as malpractice payouts and criminal convictions. Neither of New Mexico’s licensing boards performed particularly well in the report (osteopathic or the regular medical board). You can check out the study for yourself on pages 26-28 of the report.

Watch the full interview which aired earlier this week below:

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Economy Health Care Public Comments and Testimony

Paul Gessing’s Testimony on The Economic Impacts of Medicaid Expansion: Before The Health and Human Services Committee New Mexico Legislature, Santa Fe

Good morning Sen. Ortiz y Pino, Rep. Espinoza, and members of the committee. I am Paul Gessing, president of the Rio Grande Foundation, an independent, nonpartisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico.

I appreciate this opportunity to provide my organization’s perspective on whether the benefits of Medicaid expansion in New Mexico outweigh the costs and whether a “multiplier effect” exists by which increased federal dollars will generate increased economic growth in our state.

Introduction

Before discussing the economic and multiplier impacts of Medicaid expansion, I feel it is important to discuss the impact of Medicaid on actual health care outcomes. Supporters of free markets and skeptics of the efficacy of government programs are are often accused of being callous or uncaring to the poor, but we actually want government spending to be used in ways that have proven, positive results.

There is no question that Medicaid expansion is a massive expansion of a health care entitlement. According to Congressional Budget Office, between 2014 and 2022, expanding Medicaid will cost American taxpayers at the combined federal and state levels $1 trillion. Before discussing the economic impact on New Mexico, it is important to ask what kind of health care we getting for that money.

For starters, the inspector general of the Department of Health and Human Services found that over half of providers no longer accept Medicaid patients. Of doctors who do accept Medicaid, the provider networks are narrow and nearly one-third face wait times of over a month.

Last year, The Wall Street Journal profiled Farmington family physician Holly Abernethy, who

has turned away all newly eligible Medicaid beneficiaries because she can’t sustain her practice expenses if her proportion of Medicaid patients grows much beyond her current 13%.

For a moderately complex office visit, she is paid about the same as [a] nurse practitioner: about $80 from Medicaid and about $160 on average from commercial insurance.

Says Dr. Abernethy, “I would love to see every Medicaid patient that comes through my door.” “If you give people coverage, they should be able to utilize it.” But making it work would extend her workday, and “I have three small children and I miss them.”

Moving from anecdotal to empirical evidence, it is worth considering Oregon’s experience. In 2008, a total of 29,835 Oregonians were given the opportunity to apply for the state’s Medicaid program out of almost 90,000 people on the waitlist. About 30 percent of those who were selected from the waitlist both chose to apply for Medicaid and met the eligibility criteria. Because it examined a unique, real-world experiment complete with a randomly selected control group, the study of Oregon’s Medicaid expansion is considered the “gold standard” in health-care research.

The study’s results have been published in academic journals, including The New England Journal of Medicine and the The American Economic Review in 2013. Its conclusion was that “Medicaid increased health care utilization, reduced financial strain, and reduced depression, but produced no statistically significant effects on physical health or labor market outcomes.”

The Oregon study is not alone in casting a skeptical light on Medicaid’s health benefits:

• A 2010 study of 1,231 patients with cancer of the throat, published in the medical journal Cancer, found that Medicaid patients and people lacking any health insurance were both 50 percent more likely to die when compared with privately insured patients—even after adjusting for factors that influence cancer outcomes. Medicaid patients were 80 percent more likely than those with private insurance to have tumors that spread to at least one lymph node.

• A 2010 study of 893,658 major surgical operations performed between 2003 to 2007 published in the Annals of Surgery found that being on Medicaid was associated with the longest length of stay, the most total hospital costs, and the highest risk of death. Medicaid patients were almost twice as likely to die in the hospital than those with private insurance. By comparison, uninsured patients were about 25 percent less likely than those with Medicaid to have an “in-hospital death.”

• A 2011 study of 13,573 patients, published in the American Journal of Cardiology, found that people with Medicaid who underwent coronary angioplasty (a procedure to open clogged heart arteries) were 59 percent more likely to have “major adverse cardiac events,” such as strokes and heart attacks, compared with privately insured patients. Medicaid patients were also more than twice as likely to have a major, subsequent heart attack after angioplasty as were patients who didn’t have any health insurance at all.

• A 2011 study of 11,385 patients undergoing lung transplants for pulmonary diseases, published in the Journal of Heart and Lung Transplantation, found that Medicaid patients were 8.1 percent less likely to survive 10 years after the surgery than their privately insured and uninsured counterparts. Medicaid insurance status was a significant, independent predictor of death after three years—even after controlling for other clinical factors that could increase someone’s risk of poor outcomes.

In all of these studies, the researchers controlled for the socioeconomic and cultural factors that can negatively influence the health of poorer patients on Medicaid.

So why do Medicaid patients fare so badly? Payments to providers have been reduced to literally pennies on each dollar of customary charges because of sequential rounds of indiscriminate rate cuts. As a result, doctors often cap how many Medicaid patients they’ll see in their practices. Meanwhile, patients can’t get timely access to routine and specialized medical care.

medicaid-expansion-101-b

All that being said about the most important issue, the impact of Medicaid on health outcomes, I am primarily here to discuss the financial impact of Medicaid expansion on New Mexico’s economy and state budget.

In the current fiscal year, New Mexico will spend more than $5.5 billion on Medicaid, with state revenue covering just under $900 million of the total. By 2017, fully a third of the state’s population will be on Medicaid. At a time when revenue is dropping from the decline of the oil-and-gas sector, the program is seriously jeopardizing the state’s ability to balance its budget. By 2020, it is estimated that the state’s bill for covering newly eligible Medicaid recipients will be $163 million.

A Flawed Theory

The “multiplier effect” is the theory that government spending stimulates jobs creation and income growth. Many proponents of Medicaid expansion claim that since it is largely funded with “free” money from Washington, it is an economic-development tool. But, as Harvard economist Robert Barro explained in a September 2009 National Bureau of Economic Research paper, “it is wrong … to think that added government spending is free.” The money Washington is sending to New Mexico for Medicaid must come from either taxes or borrowing.

The national debt is currently $18.6 trillion. At least in the short term, the burden is sure to grow. Unfunded liabilities for Social Security and Medicare are estimated to be in the hundreds of trillions of dollars. This level of debt-creation will not continue. New Mexico, a state uniquely dependent on Washington appropriations, cannot count on an endless spigot of federal cash, for Medicaid or any other program. A reckoning is coming. It is likely to be very ugly for taxpayers in the Land of Enchantment.

The ‘Medicaid Multiplier’ Exposed

On the issue of the multiplier itself, after conducting a survey of the economic literature, Valerie Ramey, an economist at the University of California, San Diego concluded: “For the most part, it appears that a rise in government spending does not stimulate private spending; most estimates suggest that it significantly lowers private spending.” Studies by many others, including economists at the International Monetary fund, concur with Ramey’s finding.

In an effort to better understand the alleged “multiplier effect,” the Rio Grande Foundation recently examined economic performance in the 24 states that expanded Medicaid in January 2014, comparing it with the 20 states that did not. Despite tens of billions of “free” money flowing into expansion states with no state match required until 2017, the percentage of job growth in the two groups was essentially the same, with a slight edge to the non-expanding states:

medicaid_logo

The absence of a Medicaid “multiplier” is particularly stark in New Mexico. Residents continue to leave our state, the labor participation rate is falling, and unemployment is rising. Our state has yet to recover the number of jobs it had during its employment peak, more than seven years ago. The state’s extensive matrix of welfare programs is surely an incentive to remain on public assistance rather than seek opportunities in the job market.

There are many weaknesses in the claim that Medicaid expansion creates jobs for the workers needed to treat newly eligible beneficiaries. While employment in New Mexico’s health-services industry is rising, it is not at all clear that Medicaid expansion is causing the growth. The sector has been adding jobs for many years, and even increased its employment during the Great Recession.

Even if it were the case that Medicaid expansion creates healthcare jobs, in the assessment of Harvard scholars Katherine Baicker and Amitabh Chandra,

(e)mployment in the health care sector should be neither a policy goal nor a metric of success. The key policy goals should be to achieve better health outcomes and increase overall economic productivity, so that we can all live healthier and wealthier lives. Our ability to ensure access to expensive but beneficial treatment is hampered whenever health care policy is evaluated on the basis of jobs. Treating the health care system like a (wildly inefficient) jobs program conflicts directly with the goal of ensuring that all Americans have access to care at an affordable price.

One penalty of Medicaid expansion that its proponents consistently avoid addressing is the impact it has on those with non-government coverage. Broadening the program imposes “a hidden tax on … people with private insurance. Expanding Medicaid leads hospitals and doctors to shift costs onto patients with private insurance thus making private insurance less affordable and contributing to the vicious cycle of increasing the number of people without insurance.” Prices for insurance premiums are rising—not falling, as Obamacare supporters claimed – and Medicaid expansion is a likely contributor to the cost of private coverage.

In Conclusion

Prior to the enactment of this new health care law, Medicaid provided New Mexico with 70 cents on the dollar with little evidence that it “stimulated” New Mexico’s economy.

Perhaps the worst aspect of Medicaid expansion is that, like so many federal programs, it relied on the promise of “free money” to the states. If any welfare program is worth enacting or expanding, it should be the taxpayers of New Mexico that support paying into a program for the benefit of their friends and neighbors. After all, we all do want better health care outcomes.

A cash-grab based on long-discredited Keynesian “stimulus” theory with little or no health benefits isn’t just unwise, it’s immoral. Think of what else we could do with $1 trillion.

In the short term, New Mexico should work with other states to press the federal government for the flexibility required to fix a badly broken and irresponsibly unsustainable program.

Medicaid desperately needs a sweeping overhaul. Reforms must be consumer-oriented, permitting beneficiaries to obtain private coverage in a competitive marketplace. Time limits similar to those imposed under the creation of the Temporary Assistance to Needy Families program in the 1990s, are also worth consideration.

In the long term, aggressive implementation of proven economic-development strategies will create the prosperity that will enable New Mexicans to obtain private insurance, either through their employers or purchased individually. The way to gauge successful healthcare policy in New Mexico is to track how many people are leaving, not joining, our population of Medicaid enrollees.

Thank you for your time today.