A bill that would impose a tax on many New Mexicans’ health insurance premiums to help offset coverage for lower-income people has cleared the state House of Representatives.

This story also appeared in Santa Fe New Mexican

House Bill 122, sponsored by Reps. Debbie Armstrong and Javier Martínez, both Albuquerque Democrats, would increase the 1 percent surtax on insurance premiums to 2.75 percent to create the Health Care Affordability Fund. The money would be used to aid self-employed workers and other people who purchase policies through New Mexico’s Obama-era health insurance exchange.

A fiscal impact report estimates the measure would raise about $153 million per year, with 55 percent going to the new health insurance fund and the rest flowing into the state’s general fund.

Armstrong told lawmakers the legislation means “more business for insurance carriers, more people enrolling [in health insurance programs], more premium income and more people insured.”

Republican lawmakers countered, however, that someone would to have to shoulder the cost — and that was more likely to be health insurance policy-holders than insurance firms.

“They will pass [the surtax] onto consumers,” Rep. Jim Townsend, R-Artesia, told Armstrong.

Representatives of several New Mexico health insurance companies said in committee hearings last month that would be the case.

But Armstrong and other advocates of the bill say it’s a way to help the roughly 187,000 New Mexico residents under 65 who do not have health insurance.

The number of uninsured residents  is 10.5 percent of the state’s population, according to a December 2019 report by the Washington, D.C.-based Urban Institute. The national rate of uninsured Americans is 11.2 percent, according to the report. 

The report said up to 23,000 uninsured New Mexicans could gain coverage if the state reduced out-of-pocket costs for policies offered on the health insurance exchange.

A federal health insurance surtax recently was repealed. HB 122 would replace that with a state surtax. Armstrong added an amendment on the House floor allowing the state to adjust its surtax if the federal tax was reinstated. 

The bill requires the state superintendent of insurance to develop health care affordability standards and income eligibility parameters for low-income people by Jan. 1, 2023.

The insurance superintendent also would be responsible for developing a plan to expand health care coverage to state residents who do not qualify for federal insurance subsidies and would have to provide annual reports to the Legislature on the number of previously uninsured people who enrolled in coverage and their cost savings.

The House voted almost entirely along party lines, 43-25, to move the bill to the Senate for consideration, with Democrats supporting the initiative. 

The House passed a similar bill last year, but it languished in the Senate Finance Committee.

After the vote, Armstrong said the bill’s passage is “great news for New Mexicans who are struggling to purchase health insurance or stay insured.”