Committee approves bill to reset state health plan to 80/20, extend help to National Guard; 10-4 vote

The Appropriations & Finance Committee voted to pass Senate Bill 376, a package of changes to the state employee health benefits program that resets employer contribution to about 80% of premiums, establishes actuarially sound annual budget requests for premiums, creates premium-assistance programs for low-income state employees, and expands a program to lower premiums for eligible members of the New Mexico National Guard. The motion to pass was made by Representative Sanchez and seconded by Representative Silva; the committee reported the bill as approved by roll call, 10 in the affirmative and 4 in the negative.

Supporters said the bill addresses a long-running budget gap in the state health benefits plan. "The changes in this bill will reduce employee costs by more than 40% on average, permanently, eliminate the state health benefits budget shortfall, decrease the uninsured rate among members of the national guard, give local public bodies more certainty around their costs, and save the general fund $155,000,000 over the next 5 years, including $20,000,000 in savings to the general fund in FY26," Carrie Armijo, cabinet secretary of the New Mexico Health Care Authority, told the committee.

The bill packages five specific changes. It (1) requires the secretary to submit actuarially sound budget requests for state health benefit premiums every year; (2) replaces the current salary-tiered employer contribution schedule with an 80/20 split for all eligible employees; (3) creates a program funded by the Health Care Affordability Fund to cover some or all premiums for low‑income employees; (4) adds patient protections related to fair hospital pricing initiatives; and (5) creates a program to lower premiums for National Guard members who qualify for TRICARE Select Reserve.

Public commenters and labor groups urged passage. "This is really important for state employees, some of whom are dropping health insurance, making it more affordable as one of the things that will help our recruiting and retention," Carter Bundy of AFSCME said. Brigadier General Nathaniel Carper, Deputy Adjutant General for the New Mexico National Guard, told the committee that roughly 500 Guard members are uninsured and that the change would help cover those members between federal orders.

Opponents on the committee questioned using the Health Care Affordability Fund for state employees and the program's impact on small businesses. Representative Dow, Representative Duncan and others recalled the 2021 action that created the fund and said its original purpose was to lower premiums for uninsured New Mexicans and small employers. Representative Pettigrew also said he would not support the bill in committee and requested further conversation before floor consideration. Committee supporters responded that recent legislative actions expanded the fund and that the proposal uses a mix of approaches so low-income state employees would not see a 40% premium increase if premiums were immediately reset to actuarially sound levels.

Committee members asked technical questions about funding sources and population thresholds. Committee testimony and the bill text indicate the affordability fund would cover assistance for employees up to 250% of the federal poverty level, the affordability fund contribution for this purpose is estimated at a little over $10 million recurring, and the state portion of the total premium pool is over $500 million. Witnesses told the panel about a projected shortfall of approximately $68 million compared with a projected shortfall of $87 million if no action is taken.

The bill now moves to the full chamber for further consideration.