On the heels of a report highlighting New Mexico as the only U.S. state without declining enrollment on its healthcare exchange, legislative analysts warned in a new report released this week that the fund keeping residents’ premiums affordable will soon run out of money.
New Mexico lawmakers in recent legislative sessions approved approximately $40 million in state funds aimed to replace expiring federal tax credits that offered significant insurance premium assistance to roughly 80,000 residents who acquire their insurance from the BeWell exchange.
But a new 55-page report from the Legislative Finance Committee projects that rising health insurance costs, as well as federal cuts and changes that may drive more people to the exchange, will quickly tap the Health Care Affordability Fund, which pays for the expired tax credits.
Without any changes to costs or eligibility, the LFC projects the fund may face a shortfall of $85.3 million by the 2028 fiscal year, which begins July 1, 2027. By fiscal year 2030, the fund will run a projected shortfall of $273 million.
The reasons behind the shortfall vary, the report says, but rising healthcare premium costs constitute one major factor. New Mexico’s four marketplace insurers increased their premiums 34% in 2026, and have proposed an additional 24% increase in 2027, according to the report.
In 2026, United Healthcare raised insurance premiums an average of 52% on 12,000 policyholders. That marks the single biggest increase among the four insurers, and it prompted many United Healthcare policyholders to change carriers, according to the LFC.
Still, BeWell enrollees stayed largely insulated from those increases, thanks to the state subsidies, the LFC found. Despite the hike in costs, low-income New Mexicans comprising more than one-third of BeWell enrollees had zero costs for monthly premiums, according to the report.
The LFC found that more than 25,000 enrollees whose income sits between 100% and 200% of the federal poverty level paid premiums of between $10 and $67 per month, thanks to federal and state assistance, despite their pre-subsidy premiums averaging roughly $845.
The federal poverty level between 100% and 200% captures income between roughly $16,000 and $32,000 for a single person and between $33,000 and $66,000 for a family of four.
But, unlike the other nine states that offset the expiring federal credits to varying degrees depending on income — and only fully replaced the tax credits for low-income earners — New Mexico extended the subsidies to all income levels.
As a result of economists’ projections, the LFC recommended the Health Care Authority, which has discretion over eligibility and benefit amounts, pare back some of the state subsidies.
Specifically, the LFC recommended reducing state premium assistance for all recipients by an unspecified amount, with the greatest reductions imposed on those at incomes above 200% of the federal poverty line. The LFC concluded that the changes may increase both low-income enrollment and also result in coverage loss for those who make 600% or more of the poverty level.
DeAnna Stock, the HCA’s director of coverage and affordability for the Healthcare Affordability Fund, told lawmakers the HCA is “looking at” accepting the LFC economists’ recommendations, which they project would save the fund roughly $75 million in the fiscal year beginning July 1, 2027.
Stock added that the authority has hired an actuarial firm to determine a sustainable way to cover as many people as possible, particularly those with the lowest income.
“The HCA does remain committed to prioritizing affordability for individuals and families with the greatest financial need,” she said.
