A Legislative Finance Committee evaluation presented to members found that revenue from the health‑insurance premium surtax routed to New Mexico’s Health Care Affordability Fund (HCAF) has significantly exceeded the amount spent on premium and out‑of‑pocket subsidies to date, and recommended that the Health Care Authority (HCA) and partners refine performance measures and tie future distributions to measurable targets.

Matt Goodlaw, a program evaluator for the LFC, told the committee the statute that created the fund (Laws 2021, ch. 136, Senate Bill 317) required LFC and the Health Care Authority to monitor affordability programs for three groups: small businesses, low‑ to moderate‑income residents who lack other coverage, and uninsured residents. Goodlaw said appropriations to HCAF ‘‘far exceeded the demand’’ as implemented and that HCA should work with LFC and the Department of Finance and Administration to produce comprehensive performance measures and five‑year uninsurance targets.

HCA officials agreed the fund has room to improve performance measurement while describing current enrollments and risks. Deputy Secretary Alex Castillo Smith and Secretary Kerry Armijo told the committee HCA serves more than 848,000 Medicaid members and that HCAF programs provide premium assistance to more than 110,000 New Mexicans through a mix of market and small‑employer subsidies. Armijo said the HCAF currently sits on substantial reserves because federal changes during and after the COVID‑19 pandemic reduced immediate demand for state subsidies.

Both the LFC report and HCA staff warned of pending federal actions that could shift costs to the state. Goodlaw said the end of enhanced federal marketplace subsidies could increase per‑member marketplace assistance costs on the state side from about $45 per member per month to as much as $130 per member per month. HCA projected that FY27 marketplace affordability costs could grow to about $119 million under that scenario (up from about $72 million projected in FY26), and estimated total FY27 HCAF program costs near $225 million against forecast surtax revenue of roughly $222 million.

The LFC evaluation also described a planned HCA program to provide coverage options for undocumented residents (the coverage expansion program). Preliminary HCA actuarial estimates cited in the evaluation placed annual costs for that program between $23 million and $72 million, depending on assumed reimbursement rates and enrollment scenarios.

Why it matters: The HCAF was designed to make coverage more affordable and to reduce New Mexico’s uninsurance rate. The LFC evaluation urged clearer, outcome‑oriented performance measures and better alignment between the share of surtax distributed to HCAF and measurable targets, so the legislature can ensure program funds achieve intended affordability outcomes.

HCA officials told the committee they agree with the thrust of the evaluation, are working with LFC and DFA on performance measures, and are preparing for potential federal changes that would increase state subsidy needs.