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House Bill 955 Comprehensive Study HHOOUUSSEE BBIILLLL 995555 CCOOMMPPRREEHHEENNSSIIVVEE SSTTUUDDYY ON HEALTH CARE AND HEALTH CARE COSTS IN NEW MEXICO Legislative Health and Human Services Committee Santa Fe, New Mexico December 2004 HHOOUUSSEE BBIILLLL 995555 CCOOMMPPRREEHHEENNSSIIVVEE SSTTUUDDYY ON HEALTH CARE AND HEALTH CARE COSTS IN NEW MEXICO Legislative Health and Human Services Committee Santa Fe, New Mexico December 2004 for more information, contact: The New Mexico Legislative Council Service 411 State Capitol Santa Fe, New Mexico 87501 (505) 986-4600 www.legis.state.nm.us 202.153454 TABLE OF CONTENTS Foreword ......................................................................................................................... i Executive Summary........................................................................................................ iii Findings ...........................................................................................................................1 State and National Health Care Reform Efforts over the Last Ten to Fifteen Years ....................................................................................................1 Arizona......................................................................................................3 Maine ........................................................................................................5 Minnesota..................................................................................................6 Oregon.......................................................................................................8 Tennessee................................................................................................11 Texas.......................................................................................................12 Utah.........................................................................................................15 Vermont ..................................................................................................17 Wisconsin................................................................................................18 New Mexico............................................................................................21 Medicare Federal Health Care Reform Efforts.......................................23 Military Health Care ...............................................................................25 Indian Health Service..............................................................................26 ERISA.....................................................................................................28 HIPAA ....................................................................................................30 Health Savings Account..........................................................................32 Public and Private Costs of Providing Health Care to New Mexicans .............35 Overview ...............................................................................................35 Data Collection and Methodology ........................................................35 Study Strengths and Limitations ...........................................................36 New Mexico Health Care Costs ............................................................36 Uncompensated Care .............................................................................40 Conclusion .............................................................................................41 Guide to Tables.......................................................................................42 Contacts...................................................................................................55 Impact Analysis of Health Care Spending on New Mexico's Economy ..........57 Overview.................................................................................................57 The Health Care Industry in New Mexico and the United States...........57 The Effect of Federal Health Care Spending..........................................59 The Effect of State Health Care Spending..............................................63 Summary and Conclusion.......................................................................67 Policy Implications .......................................................................................................69 FOREWORD During the 2003 session, the New Mexico Legislature passed House Government and Urban Affairs Committee Substitute for House Bill 955, which the governor signed into law as Laws 2003, Chapter 380. The legislation required the Legislative Health and Human Services Committee (LHHS), in conjunction with the New Mexico Health Policy Commission (HPC), to … conduct a comprehensive study to review or determine the impact of health care expenditures on the health care industry and the state's economy, including compensated and uncompensated costs; the expectations and outcomes of state and national health care reform efforts over the last ten to fifteen years; and the public and private costs of providing health care to all New Mexicans. The impetus for the study was the recognition that despite 10 to 15 years of state and national health care reform efforts, the cost of health care continued to rise, outpacing regular inflation; more than 40 million Americans were without health care; and more than 20 percent of New Mexicans were uninsured. In 2002, the Medicaid Reform Committee held 21 full-day meetings that included over 40 testimonies and presentations, more than 100 written and verbal public input comments and over 2,000 pages of written testimony, handouts, reports and graphs. What became clear was the enormous complexity of the administration and financing of public and private health care. The legislature needed verifiable, objective health care financing information to formulate health care policy. Thus, in 2003, Representative Danice Picraux introduced House Bill 955. Throughout the 2003 and 2004 interims, LHHS members asked questions of and provided general direction to LHHS staff. Staff from the Legislative Council Service (LCS), LHHS and HPC, as well as outside contractors, researched health care financing, reform efforts and economic impact to produce this report. Lisa Cacari-Stone, Ph.D., and Karen Wells, R.N., conducted the vast majority of health care financing research and writing. Patrick Alarid, formerly with the HPC, provided information on county indigent health care funding. Tony Popp, Ph.D., professor at New Mexico State University, along with faculty and students, provided the economic impact analyses for both in-state and out-of-state funding of health care. Ramona Schmidt, LCS attorney, and Phil Lynch, LCS bill drafter and LHHS staffer, provided other research and analyses of financing and __________ i reform efforts. Sheila C. Hennessy Sievers and Mateo Delgado, third-year law students at the University of New Mexico School of Law, with assistance from Professor Rob Schwartz, provided extensive research and writing on state and national health care reform efforts. Raúl E. Burciaga, LCS assistant director for drafting services, provided general coordination and contracting. Numerous other individuals with the state and federal governments and private organizations provided information, interviews and access to data that was used to prepare this report. DEDE FELDMAN Senator, District 13 Chair, Legislative Health and Human Services Committee __________ ii EXECUTIVE SUMMARY The rising costs of health care, federal reform efforts resulting in the devolution of increased decision-making and fiscal responsibility to the states, the growth in the number of uninsured and decreasing state budgets have posed tremendous challenges to state policymakers. Health care expenditure research plays a significant role in monitoring state health care costs and providing information to inform policy. Estimates of health care spending have become increasingly important to private industry and government. National Health Expenditures (1960-2002, CMS)1 have been regularly monitored by the Centers for Medicare and Medicaid Services, but state-level data has provided the most detailed and relevant information needed to understand how to best direct limited resources. Without evidence, important reform efforts and health policy decisions are vulnerable to competing political agendas, swayed by interest groups and other market forces. In addition, decisions without evidence may have tremendous consequences on the public's health, a state's fiscal viability and the financing and quality of health care delivered. The purpose of this study is to provide state policymakers and the public with evidence of the history of reform efforts, public and private costs of providing health care to New Mexicans and the impact of health care expenditures on the state's economy. Most importantly, this study establishes baseline data that is needed to conduct annual state estimates of health care spending. Detailed measure of health care expenditures at the state level is the basis for monitoring market trends, informing policymakers and educating the public. BACKGROUND The Legislative Health and Human Services Committee was charged with completing a health care costs study to determine the amount of public and private money expended on health care in the state, as well as the economic impact and the effect of health care reform efforts. The study was mandated by House Bill 955 from the 2003 regular legislative session
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