Senate's budget proposal could push New Mexico hospitals to close their doors
By Cathy Cook / Journal Staff Writer Jun 22, 2025
In the middle of a round table discussion on potential Medicaid cuts with hospital heads, a nursing home director, nonprofit leaders and a congressman, Carlos Zuniga unpacked bottles of prescription medications from his backpack.
“Without Medicaid, I wouldn’t be able to get the things I need to just live a regular life, for my pain management. This is just some of the medication that I need to take four or five times a day to be able to function and have a productive life,” Zuniga said.
Zuniga was representing Albuquerque’s National Alliance on Mental Illness chapter, a nonprofit he credits with helping him adapt to life after prison and where he serves on the board of directors.
In 2022, he received surgery to treat a spinal column injury at the University of New Mexico Hospital, which he likely wouldn’t have had without Medicaid, he said. Now Zuniga lives on a fixed income of $900 a month, and Medicaid pays for the expensive prescriptions he needs to manage his health, including chronic pain.
Medicaid helped him get a housing voucher, and he believes access to steady pain management helped him get a high school diploma. Zuniga said he’s working toward becoming a peer support worker.
Democratic lawmakers have been sounding the alarm on potential Medicaid cuts in the “One Big Beautiful Bill Act” for months, but with more drastic spending cuts proposed in the Senate, hospital associations have joined in ringing the alarm bell.
The budget bill working its way through Congress could cause five to eight hospitals in New Mexico to close their doors, according to Julia Ruetten with the New Mexico Hospital Association. One of those is an urban hospital, while the others serve rural communities. Ruetten declined to name the specific hospitals.
“I think that would be something that we would see in maybe 18 months to 24 months, once all of the dust settles on this,” Ruetten said. “... For some of them, I think it would be a slow, sad, painful decline, because services would close over time, and then eventually, likely, the hospital would close.”
In part, that’s because of proposed changes to provider taxes, which would reduce the pool of matching funds that New Mexico uses to draw down federal Medicaid dollars. In part, hospitals may be forced to shrink because an estimated 10 million to 15 million people would lose Medicaid coverage if expanded work requirements pass, according to the Center on Budget Policy Priorities.
More frequent and paperwork-heavy re-enrollment would likely also cause people to lose their health care coverage and show up as uninsured patients in hospital waiting rooms.
Proposals like work requirements that increase the amount of paperwork Medicaid recipients have to wade through also worry mental health advocates like Zuniga, who fear more red tape will disproportionately affect people with mental health issues.
“A lot of people don’t just take their treatment; they need help taking their treatment, and so if their treatment is cut off, they’ll be perfectly happy with it, but they’re going to deteriorate mentally,” said Jane Garland, vice president of NAMI Albuquerque. “It’s going to be a lot more problems on the street than we already have.”
The bill could strain large urban hospitals, like the University of New Mexico Hospital. When smaller hospitals have to cut services or close their doors altogether, often those patients end up at larger urban hospitals. And because health care is no longer available in their community and may be hours away, those patients may have waited longer to be seen and come to the hospital sicker, requiring more intense and expensive care.
“For those that are familiar with the Albuquerque area, most of our hospitals are running above capacity,” said Troy Clark, New Mexico Hospital Association president.
Rural hospitals at risk
Not-for-profit Roosevelt General Hospital in Portales is the only hospital in Roosevelt County and sees 3,000 to 4,000 patients per month. Almost a third of those patients are on Medicaid. It offers emergency, primary, pediatric and in-patient care, as well as pain management, women’s health and general surgery.
But county residents still have to travel to Lubbock or Amarillo, Texas, to see specialists. The hospital is trying to expand its services, adding orthopedic surgery and urology care. If Medicaid cuts in the Senate bill pass, the hospital may be reducing services instead, according to hospital CEO Kaye Green.
“If we have significant cuts to Medicaid, it could be devastating for all hospitals, but rural hospitals in particular, because in rural settings, we don’t have a large percent of commercial insurance payers, and that’s really where you can make up your profits. … When I say profit, I just mean net income each year. So every dollar of net income that we make above what our costs are, it gets reinvested back into our people, our equipment, our buildings and any service expansions that we would like to pursue,” Green said.
The hospital has two behavioral health providers who give mental health and substance use disorder care.
“We don’t make money on those, but we maintain them because it’s a vital service for our community to have behavioral health care. And I hate to say this, but that could theoretically be one program that we could no longer sustain with significant Medicaid cuts,” Green said.
Two years ago, Roosevelt was close to not being able to make payroll, largely because Medicaid is underfunded, Green said. Then New Mexico’s Healthcare Delivery and Access Act passed, which implemented a hospital provider tax and set up a system for better reimbursing hospitals for Medicaid care and incentivizing quality care.
The Senate draft of the “One Big Beautiful Bill Act” suggests reducing the cap on the provider tax from 6% of hospital revenue to 3.5%. New Mexico’s provider tax on hospitals is set at 5.8%.
New Mexico has provider taxes on hospitals and nursing homes, which the state gives the federal government as matching funds to get more Medicaid dollars for those health care facilities. The hospital tax brings in $310 million, and that match draws down $1.2 billion in federal Medicaid dollars to reimburse hospitals for health care they gave to Medicaid patients.
The state then uses 60% of the total $1.5 billion to reimburse hospitals based on the number of Medicaid patients they served and 40% to reimburse hospitals based on the quality of care they provided. The nursing home tax has been in place several years, but the hospital tax was implemented last year and hospitals received their first payment in March. Other states have had provider taxes in place much longer, and 49 of 50 states have one.
Fixed costs for hospitals — like supplies, equipment and wages — have increased in recent years, Ruetten said, and at the same time, some federal programs that gave hospitals funding were retired. The state Legislature’s solution was the new provider tax, along with $50 million in bridge funding.
“Using the provider tax is really vital to hospitals, getting that additional kind of shot in the arm of funding, and that it’s already being threatened to go away is pretty scary,” Ruetten said.