New Mexico: Something amazing just happened in the Land of Enchantment

I already wrote about this over a month ago but it didn't get the attention it deserved at the time, and given that we're much closer to the actual 2026 ACA Open Enrollment Period starting and that there's been another important development since then, I figured I should post an updated entry about it.

In late August, the New Mexico Office of Superintendent of Insurance (OSI) dropped the bad news:

Santa Fe, NM – The New Mexico Office of the Superintendent of Insurance (OSI) has approved 2026 rates for individual market Affordable Care Act (ACA) plans sold on and off BeWell, the New Mexico Health Insurance Marketplace, with an average increase of 35.7%. Today, 75,000 New Mexicans buy health insurance through BeWell and 88% of enrollees qualify for federal and state premium assistance.

However, there was an extremely important caveat:

While it appears that Congress will allow enhanced federal Premium Tax Credits to expire, New Mexico’s Health Care Affordability Fund (HCAF) will cover the loss of the enhanced premium tax credits for households with income under 400% of the Federal Poverty Level (or $128,600 for a family of four), providing up to $68 million in premium relief for working families who enroll in coverage through BeWell in 2026. Federal and state premium assistance will continue to reduce the impact of the rate increases.

This is HUGE: 85% of NM ACA exchange enrollees earn less than 400% FPL, which means that 85% of NM ACA enrollees will have the federal subsidy losses completely cancelled out.

This leaves roughly ~6,300 on-exchange enrollees who earn over 400% FPL being hit with the full brunt of the rate hikes (plus perhaps 8,000 off-exchange enrollees who aren't eligible for any tax credits at all), but that's still a lot better than everyone being hit with it.

But wait, there was more!

New Mexico has their own supplemental ACA subsidy program which provides additional savings to enrollees on top of the federal tax credits. At first I assumed that most of the funding to backfill the lost federal assistance would come from scrapping their "Turquoise Plan" progam. HOWEVER, it turns out that I was wrong:

Turquoise Plans, which offer extra savings on out-of-pocket costs, including lower deductibles and co-pays, continue to be available with affordable premiums and out-of-pocket costs similar to last year.

Sure enough, according to this NM Health Care Authority 2026 manual, the state somehow has enough funding to backfill all of the lost federal subsidies up to 400% FPL without eliminating the Turquoise Plan assistance, which is awesome!

BUT WAIT, THERE'S EVEN MORE!

Check out this news story from last week:

Both chambers of the New Mexico Legislature are preparing to enter their final floor sessions of the special session Thursday afternoon.

The bills now heading for final approval enable more than $100 million in new spending to offset impacts from federal cuts on food assistance and public media, along with other priorities Gov. Michelle Lujan Grisham set.

...A Senate committee Thursday morning agreed on a bipartisan vote to advance HB2, intended to protect about 6,300 New Mexicans from huge health care premium increases if federal tax credits expire as scheduled later this year.

The Senate’s Health and Human Services Committee voted 7-1 to give the New Mexico Health Care Authority flexibility it needs to ensure New Mexicans who acquire their health insurance from the state’s marketplace will still receive highly subsidized insurance, even if the Enhanced Premium Tax Credit expires at the end of this year.

...Accompanying the legislation the committee approved Thursday is a $17.3 million appropriation into the Health Care Affordability Fund, which the HCA oversees, to cover the premiums for policyholders whose income is 400% of more of the federal poverty line. The Legislature earlier this year approved funding to cover the tax credits for those who make under that threshold.

Sure enough, the bill has since passed the NM Senate and has been signed into law by Gov. Lujan-Grisham.

This means that ALL NEW MEXICO ACA EXCHANGE ENROLLEES WILL BE PROTECTED FROM THE EXPIRING FEDERAL TAX CREDITS.

I don't know if this will be limited to 2026 only or not, but either way this is a massively positive development, and it means that ~70,000 New Mexicans can breathe a huge sigh of relief no matter what the outcome of the ongoing federal government shutdown battle ends up being.

This is especially impressive considering that New Mexico is generally considered one of the poorest states in the country.

I don't know how they managed to do it when wealthier states like New Jersey, Colorado and California have only been able to fund between 10 - 40% of their lost federal tax credits (while most other states aren't doing anything at all), but it's impressive as hell. According to a trusted source of mine within the state government, they simply saw the writing on the wall and took measures to counter it as early as possible.

As they put it in the press release:

“State insurance regulators across the country are grappling with rising health insurance costs,” said Superintendent of Insurance Alice Kane. “The OSI team rigorously reviewed rate requests to ensure they were fair and actuarially justified. These rate increases are consistent with the national trends of increased medical and prescription drug costs as well as high use of health care services. Fortunately, New Mexico had the foresight to prepare for the loss of federal premium support by providing state funds to shield most consumers.”

This still leaves a nominal number of enrollees (mostly off-exchange) who will indeed have to face the 36% rate hikes, but that would be true. no matter what (plus, at this point you're mostly talking about people who are well into six figure incomes).

In any event, massive kudos to Gov. Lujan-Grisham and the New Mexico legislature for pulling this off, temporary though it might be.