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NORC at the University Chicago

Analyses of Health Care Cost Drivers in New Mexico

An American flag and a New Mexico state flag fly an adobe-style building
Reducing health care administrative costs and considering global budgeting in New Mexico
  • Client
    New Mexico Legislative Health and Human Services Committee
  • Dates
    August 2023 – December 2023

Problem

New Mexico, like many states, continues to struggle with rising health care costs.

According to the U.S. Census Bureau, New Mexico has the highest rate of public insurance enrollment in the nation (51.2 percent). Because New Mexico’s population is covered by public insurance at such high rates, the state pays significant health care costs while health care facilities tend to have less of a budgetary cushion derived from higher payments through private insurers. 

In 2023, New Mexico decided to conduct research into possible strategies for reducing costs without sacrificing quality and access.

Solution

NORC used mixed-methods research to recommend solutions to the state.

The New Mexico Legislative Health and Human Services Committee selected NORC to conduct two analyses to:

  • Recommend methods for reducing administrative health care costs
  • Assess the feasibility of implementing global budgeting in rural hospitals

NORC conducted literature reviews and more than 25 key informant interviews and analyzed hospital cost report data to develop recommendations.

To reduce health care administrative costs, we developed 11 recommendations within three categories:

  • Consider legislation to enhance uniformity and consistency across payers
  • Commission a special report on medical malpractice
  • Develop a strategic plan for implementing a Health Strategy and Impact Council

Result

New Mexico is moving forward with several of NORC’s recommendations.

After extensive analysis, NORC assessed that global budgets likely do not currently suit New Mexico rural hospitals, as they would involve significant investments in operational change and increased state capacity. The team was able to bring rigorous research methods to resolve a state’s questions and provide actionable information as the state moves into its next legislative session. Several of NORC’s recommendations were added to the committee’s formal recommendations for the state legislature to take up in future legislative sessions.

Project Leads

“State governments have a key role to play in implementing solutions to fight rising health care costs. With no shortage of options, it's important for any solution to represent a data-driven, evidence-based approach.”

Megan Stead

Senior Research Director

“State governments have a key role to play in implementing solutions to fight rising health care costs. With no shortage of options, it's important for any solution to represent a data-driven, evidence-based approach.”

Data & Findings

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