Senate committee approves measure to create Medicaid trust fund intended to shield program from federal cuts

The Senate Finance Committee on Tuesday unanimously advanced a bill to create a Medicaid trust fund intended to stabilize state Medicaid financing if federal matching funds are reduced.

Sponsor testimony explained the fund would collect volatile portions of the state treasurer’s overnight investment earnings and other designated amounts; those earnings would be deposited into a new Medicaid trust. Once the fund reaches a threshold, the state could direct dollars from the trust to secure additional federal matching funds or to maintain provider rates and services. Supporters said the trust would smooth volatility in the general fund and protect providers, patients and graduate medical education funding.

UNM Health System Executive Vice President Michael Richards said nearly half of UNM’s patients are Medicaid beneficiaries and that stable Medicaid funding is essential for teaching hospitals and graduate medical education. Monica Otero of New Mexico Voices for Children, AARP New Mexico and other advocacy organizations also testified in support, citing Medicaid’s role in covering births, children and non‑elderly adults.

The committee adopted an amendment that specified the state treasurer as the sole revenue source for the fund and added a trigger to permit withdrawals in the event of federal Medicaid funding reductions. Committee discussion covered the fund’s expected inflows and how appropriations would interact with the trigger mechanism; staff cited projected inflows on the fiscal information report and said deposits may average in the hundreds of millions annually but are volatile and seasonal.

The committee approved the amended bill and recommended it for a floor vote by voice roll: 11 in favor, 0 opposed. Sponsors and witnesses said the fund would preserve Medicaid provider rates and avoid the rapid loss of access to services if federal support shrinks.