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SANTA FE, N.M. (AP) — The governor and Legislature face a critical policy choice in the wake of Thursday's U.S. Supreme Court ruling on a federal health care overhaul and must decide whether to expand the state's biggest health care program to cover an estimated 170,000 uninsured New Mexicans.
The court ruled the federal government couldn't force New Mexico and other states to expand Medicaid eligibility in 2014 by threatening to withhold federal aid received for the program.
About a fourth of New Mexico's population now receives medical care through Medicaid, which covers uninsured children, the disabled and the poor.
Medicaid is jointly financed by the federal government and the state, with federal dollars paying for nearly 70 percent of costs. The state expects to spend about $1 billion on Medicaid in the coming year. That represents about $1 of every $5 that will be spent by the state on public education and general government operations.
In next year's legislative session, lawmakers and administration officials must decide whether the state can afford the long-term costs of expanding the eligibility of Medicaid, as called for in the federal health care law to cover more low-income adults.
"I think New Mexico would be foolish not to expand its Medicaid program. We have more to gain from that than almost any other state," said state Sen. Dede Feldman, an Albuquerque Democrat and chairwoman of a legislative study committee that handles health issues.
About 21 percent of the state's population — roughly 433,000 residents — lack health care. That's the second-highest uninsured rate in the nation.
Feldman said New Mexico stands to gain far more federal money for medical services than it would have to pay out of its budget to cover the state's share of Medicaid expansion. Initially, the federal government will pick up the tab for 100 percent of the cost of the expansion and that will drop to 90 percent in 2020.
Not expanding Medicaid, Feldman said, "would really be like looking a gift horse in the mouth and doing it only to spite those low-income New Mexicans that would qualify."
Republican Gov. Susana Martinez has supported increased state money for Medicaid since taking office, but she hasn't decided on possible expansion in light of the court's ruling, according to spokesman Scott Darnell.
"Gov. Martinez remains committed to ensuring that we provide basic health care for those most in need through Medicaid. The governor is reviewing today's Supreme Court decision and will proceed in a manner that best protects the safety net for the most vulnerable New Mexicans in a responsible and sustainable manner," Darnell said.
The Human Services Department estimates that if the expansion is implemented, and 170,000 additional people are covered by Medicaid, it would cost New Mexico about $496 million from 2014 through 2020. However, an additional $6 billion in federal Medicaid money would flow into the state to cover medical services.
The annual costs to the state would be relatively small initially but could reach about $174 million in 2020 if all 170,000 additional people enrolled in the program.
The state's costs will be lower if not all of the eligible people actually enroll in the program. The state would need to increase spending $320 million from 2014 to 2020 if about 130,000 people are added to Medicaid, according to the department.
Even before the court's ruling, the Martinez administration planned to overhaul Medicaid to try to slow the program's cost increases without changing who qualifies for health care. It's possible that any savings from the proposed changes could be used to offset expanding Medicaid to cover more uninsured New Mexicans.
State Sen. John Arthur Smith, a Deming Democrat and chairman of a Senate committee that handles the budget, said the Medicaid expansion proposal will stir a debate in the Legislature between social services advocates and those concerned about increased spending.
"So on one hand you're going to have a lot of wishes and on another hand reality is going to have to set in," said Smith, who worries about slow revenue growth. "And somewhere between the two hopefully we can come up with something that is sustainable."