What KNG’s Final Report Tells Us
KNG Health Consulting’s Final Report on its fiscal analysis of the Health Security Plan confirms what two prior New Mexico studies demonstrated: that the Health Security Plan guarantees universal health care coverage and controls rising health care costs.
As you know, the state’s Legislative Finance Committee hired KNG to determine whether the Health Security Plan’s estimated revenue will pay for its costs, assuming a 2024 start date. Because there are so many variables and unknowns, KNG was asked to develop several possible options, or scenarios. In its final report, KNG created four scenarios.
Top 4 Takeaways from the Final Report
1. The Health Security Plan leads to universal coverage.
KNG found that the Health Security Plan “would create near-universal coverage in the state,” reducing the percentage of uninsured to near zero. (KNG Final Report, p. 45)
2. The Health Security Plan costs less than the current system.
The report states: “Over our five-year projection window, the HSP [Health Security Plan] is projected to reduce health care spending in the state” (KNG Final Report, p. 48), with savings over the five-year period estimated at $1.6 billion to $2.7 billion, depending on the scenario.
3. The Health Security Plan controls rising health care costs.
KNG's data shows that the growth rate for health care costs would be substantially less under all four Health Security scenarios than what is projected under the current system. (Even in countries with universal coverage, health care costs are expected to continue to increase each year.)
4. “In some scenarios, the HSP [Health Security Plan] may be funded through existing revenue, while in other cases there may be a funding shortfall.” (KNG Final Report, p. vii)
In fact, the fourth scenario produces a funding surplus. It provides a clear pathway to a viable funding approach. In the other three scenarios, the shortfalls decrease each year. (New programs generally cost more at the beginning, so this is not surprising.)
Reasons why, according to KNG, the Health Security Plan reduces rising health care costs:
Reduced administrative costs for the state when merging Medicaid, state employees, and the health insurance exchange programs into the Health Security Plan
Lower drug costs through bulk purchasing
Billing and insurance administrative cost reductions for hospitals and providers
Stable revenues for hospitals through global budgets, enabling them to invest in better systems of care
Additional positive impacts noted by KNG but not included in the four scenario estimates:
Lower workers compensation and automobile insurance premiums – a boon to businesses, employees, and consumers
More jobs due to direct health care spending (more medical providers) and indirect health care spending (suppliers of goods and services to providers)
Over a 10-year period, the Health Security Plan, which focuses on prevention and patient-centered care, will result in a healthier population and increased productivity
Clearly, the Health Security Plan is worth investing in! As KNG found, the Health Security Plan will cost less than the current system and ensure that everyone in New Mexico has health care coverage.
Let’s get the setup phase going as soon as possible—in 2021!
Presentation this Friday on KNG’s Final Report
At 3:00 PM on Friday, September 4, KNG Health Consulting president Lane Koenig will present on KNG’s Final Report in front of the Legislative Health and Human Services Committee. Our executive director, Mary Feldblum, will speak afterward. (Click on the agenda to see a larger version.)
Watch the webcast of the meeting by clicking on the video icon on the Legislative Health and Human Services Committee's meeting page.