Taking a cue from Maine, New Mexico became the latest state to flex its muscles in response to burgeoning healthcare costs. Gov. Bill Richardson's administration floated a proposal to mandate universal health coverage, create a state-run insurance pool and boost state oversight of healthcare spending.
The reform measures were presented to the state Legislature last week in a 15-page "draft" proposal by two members of Richardson's cabinet, Human Services Secretary Pamela Hyde and Health Secretary Patricia Montoya.
While Richardson hasn't formally endorsed the measures, he has indicated he would call a special legislative session in the fall if a consensus is reached. Richardson, a Democrat, took office in January.
Several ideas would target provider costs, including annual "provider profiling" of cost data, a moratorium on nursing home construction, healthcare pricing reports, and health department approval of new nursing homes and hospitals, as well as location, financing and closures of facilities.
For underserved areas, the proposal would grant the health department authority to take a facility into receivership if the department determines that the facility's impending closure would threaten access to care.
While the proposal doesn't go as far as regulating provider rates, it does reflect a growing movement among states to rein in healthcare spending with new legislation (June 9, p. 6).
"The business community considers healthcare a major issue affecting economic development," Hyde told Modern Healthcare last week. "We put what we felt were the best of the possible ideas on paper to focus the issue."
Some ideas stem from Maine's Dirigo Health, which was signed into law last week (See related story this page). Like Dirigo, the New Mexico proposal would aim to offer affordable coverage to the uninsured by creating a purchasing pool.
In the New Mexico proposal, the pool would be run out of the governor's office and include public employees as well as healthcare practitioners and providers. Private employers who do not provide health insurance would be required to pay the pool 75% of the costs they would have incurred had they provided insurance for their employees.
The plan would redirect money that is now spent on the uninsured by county and local governments and by hospitals through bad debt. In addition, tax credits and rebates would be extended to employers and employees that purchase insurance.
But New Mexico faces significant hurdles, including a rate of uninsured residents that is 22%, twice as high as Maine's, according to figures from the Urban Institute and the Kaiser Commission on Medicaid and the Uninsured. The New Mexico proposal lacks any analysis of costs.
Many other details are lacking as well, and its authors acknowledged that some ideas may be incompatible with each other. Dan Weaks, policy director for the New Mexico Hospitals and Health Systems Association, said, "This is not a solid proposal by any stretch of the imagination."
Weaks said the hospital association would object to a renewal of certificate-of-need legislation, which the state abandoned in the early 1990s. He said if CON legislation is proposed, "it probably will not be successful, because we don't have a problem. Nobody is building anything here really."
But Hyde said many of the state's nursing homes have gone bankrupt because of oversupply. In addition, she said, investor-owned specialty hospitals have undercut the bottom lines of not-for-profit providers, forcing them to reduce services.
She said the proposal's health department oversight would be "a little different than a CON" because it would consider not only whether there is demand but whether a facility would be financially viable and promote access to care.
Hyde said state oversight is needed over facility closures, as well, citing the recent case of Las Cruces, N.M., where Memorial Medical Center nearly closed essential services earlier this year because of budget problems. Local and state governments stepped in to stave off the cuts, she said.
"We're trying to look at ways that hospitals and other large providers don't get eaten up by uncompensated care," Hyde said.