New Analysis: Health Security Plan Could Hurt New Mexico’s Economy and Lead to a $290 Million Annual Decline in Gross State Product

SANTA FE, N.M. – A new Ernst & Young LLP (EY) analysis finds that New Mexico’s proposed Health Security Plan (HSP) could lead to a $290 million annual decline in New Mexico’s gross state product (GSP) and a loss of up to 27,000 jobs equivalents annually across the state in the long-term. As a result, the HSP could have devastating consequences for New Mexico’s working families and economy.

The EY analysis, which was supported by New Mexico’s Health Care Future, assesses the economic impact of an increase in New Mexico’s payroll tax that would be needed to close any potential budget shortfall created by the HSP. The analysis builds on the findings of a 2020 report commissioned by the Legislative Finance Committee (LFC), which found that the HSP could lead to an almost $6 billion state budget shortfall and require additional funding sources, including a 2.3 percent general payroll tax increase.

The analysis found that increasing payroll taxes on hard-working New Mexicans to fund the HSP could have a negative impact on New Mexico’s GSP and the state’s overall job market. Increasing the general payroll tax on working families could lead to a $290 million annual decline in New Mexico’s GSP, causing a $350 decrease in GSP per household. Additionally, funding the HSP could lead to New Mexico losing up to 25,000 job equivalents in each of the first five years following implementation of the state government plan, 26,000 job equivalents in each of the second five years, and up to 27,000 job equivalents in the proceeding years.

The new analysis from EY adds to a growing chorus of research demonstrating the negative financial consequences of the proposed state government health insurance plan. The analysis provides further evidence that hard-working New Mexico families cannot afford to create a new government-controlled HSP. Now more than ever, we need to build on and improve what’s working, where private coverage, Medicare, and Medicaid work together to provide every New Mexican with access to affordable, high-quality coverage and care.

Key Findings:

• A 2020 report commissioned by the Legislative Finance Committee found the HSP could lead to an almost $6 billion state budget shortfall and require additional funding sources, including a 2.3 percent general payroll tax increase, to cover the full cost of the new government-controlled plan.
• EY’s new analysis finds increasing payroll taxes on hard-working New Mexicans to fund the HSP could have a negative impact on New Mexico’s GSP and on the state’s job market.
• Increasing the general payroll tax on working families could lead to a $290 million annual decline in New Mexico’s GSP, causing a $350 decrease in GSP per household.
• Funding the HSP could cost the state up to 25,000 job equivalents in each of the first five years following implementation of the state government plan, 26,000 job equivalents in each of the second five years, and up to 27,000 job equivalents in the proceeding years.

To read the complete analysis from EY, CLICK HERE.

About Ernst & Young LLP: EY exists to build a better working world, helping create long-term value for clients, people and society and build trust in the capital markets. Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate. Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today. 

About New Mexico’s Health Care Future: New Mexico’s Health Care Future is a project of Partnership for America’s Health Care Future Action. To learn more, visit newmexicoshealthcarefuture.org.