Cost Drivers Progress Since the 2024 Session

On November 5, Donald Trump was elected to become the 47th president of the United States. To pay for continued tax decreases, he has promised massive cuts in federal spending. It would be wise to assume that the federal health dollars New Mexico depends on – through programs like Medicare and Medicaid -- will be on the chopping block.

This makes it all the more important for New Mexico to develop systemic health cost solutions.  This makes investment in the Cost Drivers Project more urgent than ever.   The Health Security Campaign and leaders on the Legislative Health and Human Services Committee are determined that the $440,000 appropriated for the Health Cost Drivers Project be spent on contracting with the right experts who will provide information that helps LHHS develop New Mexico appropriate solutions that address the causes of runaway health costs.

All countries that have guaranteed universal coverage – even those with small populations – have developed policies that not only result in lower per capita spending but also produce better health outcomes than the United States. In the uniquely complex U.S. system of public and private payers — featuring thousands of health plans, each with its own cost-sharing requirements and coverage limitations — physicians and other health care providers spend enormous amounts of time and effort billing insurers.

-  “Portrait of the Failing US Health System: Comparing Performance in 10 Nations,” The Commonwealth Fund, September 2024, David Blumental, Evan D. Gumas and Arnavshah 

We are excited to report that the Legislative Health and Human Services Committee (LHHSC) has been communicating with experts who will work with the committee and stakeholders on ways to make hospitals financially sustainable and improve patient care. 

They are also exploring solutions to other key issues such as how to simplify the administrative complexity of multiple payment and accountability systems that impact cost and are frustrating to health professionals and patients. 

Finally, they are exploring how ways that New Mexico can reduce drug costs.

Both the University of New Mexico and New Mexico State will be involved to ensure that solutions will be based on NM data and information. 

Health Security Campaign Executive Director Mary Feldblum, Ph.D., an economist and social scientist, has been working closely with Rep. Eleanor Chavez and Rep. Liz Thomson, to help identify qualified consultants and how to address specific topics.

Legislative Health and Human Services Committee held a hearing the afternoon ofon November 21 on Health Care Cost Drivers.  An exciting and diverse panel diverse experts addressed some key systemic causes of rising health care costs.   

Donna Kinzer (Kinzer Consultants) a Santa Fe-based consultant and former Executive Director of, Maryland Health Services Cost Review Commission,.  She spoke about the successful Maryland global budgets program and mentioned lessons learned from their experience.

Dr. Miriam Laugesen (Columbia University) and Dr. Michael Gusmano (Lehigh University) discussed the need to reduce our costly and complex payment and accountability systems.  The two have extensive background and experience with state and international approaches that are simpler, and less costly, and have more positive health outcomes.

Dorothy Moller (DMoller Consultants) primarily focused on the failure of managed care strategies to lower costs.  She presented a variety of alternative policies that provide better outcomes. 

Dr., Gabe Sanchez, UNM Department of Political Science and Director of the Center for Social Policy, presented the results of a recent New Mexico survey demonstrating that health care costs are a primary concern of our residents.  This confirms other national polls showing that as health costs continue to outpace inflation, Americans are even more concerned about medical costs than they are about the price of eggs. .  (It is not just the price of eggs.)  The Center will be able to provide the project with critical New Mexico information.  Cis currently they are working on a survey that will explore how much time health professionals and other staff spendto justify payments (billing). billing.

Suzan Regan, Senior Program Manager of UNM’s Bureau of Business and Economic Research and Dr. Kramer Winingham, Program Director of New Mexico State’s Arrowhead Center.  They explained why it is so important for the state to collect health care expenditure data. that It will inform policy makers and others what we are spending on health care and how that data can be used to drive policy solutions that will control rising health care costs and ensure quality of care.

In the works is still another project that will address explore how our state can lower drug prices (such as join an existing multi-state consortium or create our own drug purchasing board).

Consolidation Oversight Progress Since the 2024 Session

The Office of the Superintendent of Insurance has been working with the executive branch, health care stakeholders, and attorney Jane Wishner to draft a consolidation oversight bill to be introduced in the 2025 legislative session.

Between June and October, OSI held open public meetings in various locations and online on key topics that need to be addressed in a New Mexico health care consolidations bill. The Superintendent of Insurance also convened focus groups of stakeholders including consumer advocates, providers, insurers, and hospitals.

The Health Security for New Mexicans connected many advocates and providers to this process. Our Executive Director Mary Feldblum participated in all of the open public meetings and attended the consumer advocates focus groups.

Superintendent Alice Kane described these meetings as “an eye opener.” She described the many issues of concern voiced by community members and doctors. These include: lack of any notice about changes in ownership or control, discovering that certain services were no longer offered, referral requirements that forced patients to use physicians outside the local area, as well as the increasing need to travel outside the area. She also mentioned that there was reluctance on the part of doctors and others to be public about their concerns due to fear of retribution.

On October 10, the legislative Courts, Corrections and Justice Committee dedicated an entire day to discussing the corporate takeover of our medical services. 

Sen. Katy Duhigg (D-Albuquerque), the senate sponsor of the proposed consolidations oversight bill, opened the morning session with the following warning.

"There is something unique in the history of health care that is taking place right now. Private equity and giant corporations are playing a rapidly growing role in our health care system in ways that have enormous consequences for patients and health professionals."

Duhigg, house co-sponsor Rep. Reena Sczceypanski (D-Santa Fe, Majority Leader), Kane and Wisher explained the need for this legislation and describe important provisions it would include to ensure strong oversight over future consolidations.

During the afternoon session, three academic experts presented an array of evidence regarding the negative impact of private equity firm acquisitions on health care costs and access to quality care.

Troy Clark, the President and CEO of the NM Hospital Association was given ample opportunity to comment on the presentations. His overall message: while important, oversight needs to be “measured.” In other words, corporate oversight must be limited in ways so that it does not discourage this outside much needed investment in our health care services. 

2024 Legislative Wrap-Up

In the 2024 legislative session, the Health Security Campaign and its champions Rep. Eleanor Chavez and Rep. Liz Thompson secured $440,000 to hire consultants to develop New Mexico solutions to the key causes of skyrocketing health care costs. This initiative is known as the Health Cost Drivers Project.

The 2024 legislative session also saw the passage of SB 15 – the Health Care Consolidation Oversight Act. Governor Lujan Grisham initiated this legislation in response to widespread concern about the increasing corporate control of hospitals and other health care services in New Mexico – particularly by private equity firms.

The Health Security Campaign actively supported SB 15. Corporate control over our health care is one of the drivers of rising health costs identified by the Health Cost Drivers Project.  Extensive research correlates corporate takeover of hospitals with higher costs, cuts to staff and services, and a variety of adverse patient outcomes.

While SB 15 created a temporary review process of health care entity mergers and acquisitions, the governor directed the Superintendent of Insurance to be in charge of developing a comprehensive piece of legislation to be introduced in 2025.  

Though oversight of future health care consolidations is necessary, it is not sufficient. The Health Security Campaign has consistently pointed out why so many of our hospitals and medical practices are such vulnerable targets.  Financial sustainability has to be addressed.  The Cost Drivers Project contains various solutions, including a system that guarantees revenue to pay for hospital budgets, a major solution that addresses the heart of this problem.  

Thus, it is critical to keep in mind that while we support oversight of future consolidations, the bill:

•      will not address hospitals and medical practices currently owned or managed by out-of-state-entities (such as Memorial Health Center in Las Cruces or RMCH in Gallup)

•      will not protect staff and patients who want to report problems that are impacting patient care

•      will not address who sits on hospitals boards that includes local decision-making power

•      will not address corporate rules that tell those who are licensed to practice medicine how to care for their patients

•      will not make hospitals financially sustainable and able to provide needed essential services, especially in rural areas 

This is why it is so important for you to contact your legislators and tell them how critical it is for the state to invest in the Cost Drivers Project.

Health Cost Drivers Funding in the Forecast

Right now, thanks to Rep. Eleanor Chavez, there is a very good chance that funding for what we call the “Health Cost Drivers Project” will be included in this year’s budget!  

What are the Health Cost Drivers?

Health cost drivers are the systemic reasons why health care prices are spiraling. They include increasing hospital and drug expenses, our complex administrative requirements – 30% of which are related to billing and payment – and confusing IT systems that are not compatible. Cost Drivers Chart

Why it's Urgent to Address Key Health Cost Drivers

Rising health care costs impact premiums, out-of-pocket costs, employers’ ability to afford health care coverage, and state funding of needed health programs and services. These state programs include increasing the supply of physicians and other health professionals, expanding behavioral health services, and subsidizing those who cannot afford health insurance. 

Health care spending will continue to rise if we stay on our current trajectory. All of us will be effected if this situation is not addressed. This includes the serious problem that state funding of much-needed programs will become unsustainable.  Quotes about Rising Costs

Health Cost Drivers Project Update

Since 2021, the Superintendent of Insurance and the Legislative Health and Human Services (LHHSC) have contracted experts to explore how to address selected cost drivers with a focus on how possible solutions might play out.  

Reports so far have provided vital information that serves as a springboard for designing New Mexico-appropriate policies to control health care costs. Based on these reports, next steps should include:

·       Developing a global budgets program that provides financial stability for hospitals and lowers costs.

·       Joining the existing Washington/Oregon drug purchasing consortium that already includes Nevada, Illinois and Connecticut.

·       Tightening oversight on corporate mergers and takeovers that impact the practice of medicine and increase costs.

·       Restricting prior authorization requirements that add administrative costs and interfere with care.

2023 Reports:

·       NORC Global Budgets Report,

·       NORC Administrative Costs Report

·       Drug Consortium Interim Report

The legislature needs to fund Legislative Health and Human Services Committee so it can act on these reports and explore more systemic solutions to rising health care costs