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Panel backs creating a Medicaid trust fund to stabilize provider payments; committee gives do-pass
Summary
Senate Bill 88 would establish a Medicaid trust fund seeded with reversions and other unspent appropriations; sponsors say a funded corpus will enable a recurring 5% draw to leverage federal matching dollars and stabilize Medicaid reimbursements for providers.
The Senate Health and Public Affairs Committee gave a do-pass recommendation to Senate Bill 88 on May 20 after extended testimony from health-care provider groups, advocacy organizations and business representatives.
Sponsor Senator Scherer described SB88 as a trust-fund model similar to New Mexico’s early childhood fund. The bill would seed a Medicaid trust fund with special appropriations and unspent recurring or nonrecurring appropriations (reversions), capital-outlay balances and a share of state treasury earnings. The fund would grow through investment; once the corpus reached $2 billion the statute would allow a 5% annual draw (estimated at $100 million) that, when combined with federal Medicaid matching funds, could leverage up to roughly $400 million in annual Medicaid funding, supporters said.
Supporters included the New Mexico Medical Society, New Mexico Hospital Association, Think New Mexico, the Greater Albuquerque Chamber of Commerce and advocacy groups such as the League of Women Voters and New Mexico Center on Law and Poverty. Witnesses argued the fund would stabilize Medicaid reimbursement and help retain and recruit providers.
Committee members questioned the pace of growth, sources of seed money, and contingencies if the legislature needed to access the fund in a budget emergency. Sponsor Scherer and witnesses said the bill aims to capture otherwise unspent state dollars; reversions have ranged historically from roughly $81 million to $379 million in the last five years and a conservative estimate of $100 million per year was used in projections. Members also discussed guardrails and whether transfers could be used for non-Medicaid purposes under extraordinary circumstances; the bill contains a prioritized order of funds the legislature would exhaust before tapping the trust corpus for general fund needs.
A motion for a do-pass recommendation carried by roll call, 9 to 1. Committee members who supported the bill described it as a fiscally creative way to buffer potential federal Medicaid cuts and to stabilize provider payments; one senator noted concerns about the narrow focus on Medicaid rather than a broader low-income health care fund.
