New Mexico funding set to blunt impact of federal health subsidy expiration
November 15, 2025Millions of Americans who rely on the Affordable Care Act for health insurance are bracing for skyrocketing premiums in 2026 after the failure of congressional Democrats’ efforts to extend federal subsidies, which drove the longest federal government shutdown in history.
But New Mexicans with insurance through the ACA, also known as “Obamacare,” could be in large part spared — at least until June — from those soaring costs because the state is spending millions to backfill the federal subsidies.
The Legislature during its regular session early this year and in an October special session allocated around $40 million to fill in for the lapsing subsidies in the first half of next year, officially called Enhanced Premium Tax Credits. The money comes from the state’s Health Care Affordability Fund, which is financed by a state tax on insurance companies.
“That responsible saving and planning that was done to establish the Health Care Affordability Fund allowed us to have the funding for this moment,” said House Majority Leader Reena Szczepanski, D-Santa Fe. She added one of her top priorities is to fight for an extension of the funding.
The expiring federal subsidies reduce or eliminate premiums for around 67,000 low- and moderate-income households in the state.
“To New Mexicans concerned about premium spikes: The state has stepped in to protect you from federal cuts through the end of June 2026,” said Jodi McGinnis Porter, a spokesperson for Gov. Michelle Lujan Grisham.
The state Health Care Authority in the coming legislative session, which begins in late January, is requesting $103.7 million to extend those subsidies, an HCA spokesperson said. McGinnis Porter said the governor “will work with legislators” to secure support for additional funding.
She urged New Mexicans to “contact your state legislator and encourage them to support extending this funding in the upcoming legislative session.”
State seeks to soften blow
Separately, New Mexicans may see higher costs on the Affordable Care Act exchange for next year due to insurance companies raising premiums. But the magnitude of those increases will be softened in New Mexico because of the subsidies continuing, Szczepanski said.
The Legislature’s goal, she said, “was to protect New Mexicans from being hit twice: once by the rising insurance premiums across the board, and second by the expiration of the Obamacare tax credits.”
“Premiums have increased across the board, and while the action that the state took offsets that significantly, it is not going to completely cover the increased premium costs,” she added.
A handful of other states plan to partially backfill the subsidies, but New Mexico appears to stand alone in fully backfilling them.
“New Mexico is the only state in the nation that’s prepared to fully mitigate the federal cuts to the marketplace,” Health Care Authority Cabinet Secretary Kari Armijo said in an Oct. 15 Legislative Finance Committee hearing.
“New Mexicans who obtain their health insurance through the exchange are going to see benefits that, unfortunately, residents of other states aren’t going to in the same way,” Szczepanski said.
Those who rely on health care through the exchange marketplace can include self-employed workers, those who work at small businesses, in the gig economy and others who otherwise lack employer-sponsored insurance but make too much to qualify for Medicaid. There are around 76,000 New Mexicans who receive health care through the state exchange, called BeWell, the majority of whom qualify for subsidies.
Extending the federal subsidies was at the crux of a fight that shut down the federal government for more than a month. That impasse ended last week after a handful of U.S. Senate Democrats broke ranks and voted to reopen the government without extending the subsidies. Millions across the country could drop their insurance because of skyrocketing costs as a result, experts have said.
By the numbers
Households across the board would see premium increases as a result of the subsidies expiring. Americans who make more than four times the federal poverty limit, which is equivalent to $128,600 for a family of four, will lose the federal enhanced subsidy altogether. Households under 400% of the poverty line will see their subsidies reduced or eliminated.
A family of four in Santa Fe County with an income of $130,000 per year would pay $27,000 per year for health insurance if not for the state subsidies, according to the state’s online calculator, using the benchmark silver plan. With state assistance, that family would pay around $11,000 per year.
Without the aid, many families would likely go uninsured, the Office of Superintendent of Insurance concluded in a report earlier this year.
A single adult in Bernalillo County making $30,000 a year would need to pay $155 monthly for a benchmark plan through the marketplace, or over $1,800 annually, if not for the state filling in, according to that calculator. With the state’s help, that person would not pay any premium.
The enhanced subsidies were added in 2021 as part of the COVID-19 relief bill the American Rescue Plan Act and extended the next year as part of the climate change and health care bill the Inflation Reduction Act. There are around 61,000 New Mexico enrollees who make under 400% of the federal poverty level and will benefit from the state funding, according to the Health Care Authority, plus 6,300 people over the 400% income level who will.
Open enrollment for New Mexicans to sign up for insurance through the ACA is underway now and lasts through Jan. 15.
Originally published by the Santa Fe New Mexican