Issue Summary News Policy Report

2025 Legislative Update

Think New Mexico advocated for four major reforms to address the health care worker shortage during the 2025 legislative session. Two of the bills passed, while the others failed to pass this year.

PASSED: Senate Bill 88 and House Bill 14

1) Senate Bill 88: Creating the Medicaid Permanent Trust Fund

Since 1973, New Mexico legislators have created twelve permanent funds to provide long-term dedicated funding for policy areas ranging from higher education to rural libraries. Although Medicaid is the single largest line item in the state’s budget, prior to 2025 New Mexico had not created a permanent fund to support the state’s share of Medicaid costs. This is an important piece of addressing the health care worker shortage because low Medicaid reimbursement rates are one of the three biggest factors contributing to New Mexico’s health care worker shortage.

Senate Bill 88 was sponsored by Senate Finance Chair George Muñoz (D-Gallup), Senate Minority Leader William Sharer (R-Farmington), and six other bipartisan co-sponsors. It proposed to create a new permanent trust fund for Medicaid, which will help the state increase those reimbursement rates to health care providers who treat patients insured under Medicaid.

The bill includes a recurring funding source that will grow the fund until it reaches $2 billion, at which point it will generate $100 million a year in state funding for Medicaid. With the 3:1 federal match, that will make $400 million available to increase reimbursement rates for health care providers.

Senate Bill 88 passed both the Senate and the House by wide bipartisan margins.

2) House Bill 14: Repeal the Gross Receipts Tax on Coinsurance for Medical Services 

Another of the three biggest factors in New Mexico’s loss of doctors is the state’s Gross Receipts Tax (GRT) on medical services, which is only imposed by one other state (Hawaii, which caps its tax at 4.7%, unlike the 8% that many New Mexico doctors, dentists, and other health care providers pay).

Unlike most businesses, which simply pass on the gross receipts tax to their customers, medical providers are generally not able to pass the tax on to insurance companies, Medicaid, or Medicare. As a result, doctors, dentists, and other health care providers end up bearing the full burden of the tax, making it more expensive to practice medicine in New Mexico than in other states.

Think New Mexico supported Senate Bill 295 and House Bill 344 to permanently repeal the GRT on medical services. After significant negotiation between the House and Senate over which reforms should be included in this year’s tax omnibus tax package, the final version of House Bill 14 included a major step toward the elimination of the GRT on medical services. The bill repeals the tax on coinsurance, on top of the existing deduction for co-pays and deductibles. This change will reduce the GRT on medical services by nearly $50 million annually!

(Think New Mexico also supported House Bill 52 to expand access to the Rural Health Care Practitioner Tax Credit to EMTS, paramedics, occupational therapists, audiologists, speech and language pathologists, and licensed practical nurses. This reform was not included in House Bill 14.)

FAILED: Interstate Health Care Worker Compacts & Medical Malpractice Reform

1) Join the 9 major interstate health care worker compacts New Mexico does not yet participate in. 

Think New Mexico worked to pass nine bills that would bring New Mexico into the interstate compacts for physicians (Senate Bill 46; House Bill 243), physician assistants (House Bill 413), psychologists (House Bill 242; Senate Bill 106), counselors (House Bill 217), dentists and dental hygienists (House Bill 441; Senate Bill 433), emergency medical personnel (House Bill 412), audiologists and speech therapists (House Bill 79; Senate Bill 104), physical therapists (House Bill 82), and occupational therapists (House Bill 81).

These bills would make it easier for health care providers licensed in other states to provide care in New Mexico, including via telehealth. Without these agreements, doctors from other states cannot legally provide services in New Mexico unless they go through New Mexico’s lengthy licensing process.

At least 31 other states are already a part of these compacts, and New Mexico’s failure to participate puts our state at a serious competitive disadvantage in attracting doctors and other health care workers.

Since 2003, New Mexico has been one of 40 states in the Nurse Licensure Compact, which grants nurses a multistate privilege to practice in other compact states. As many as 80% of the nurses at some New Mexico hospitals, especially in rural and border areas of the state, would not be practicing here but for this compact.

Yet New Mexico is one of only five states that has joined two or fewer interstate compacts. By contrast, our closest neighbors have adopted five or more interstate compacts—Arizona: six; Colorado: ten; Oklahoma: eight; Utah: nine; and Texas: five.

Seven of the nine compact bills introduced during the 2025 session passed the House unanimously (the last two ran out of a time awaiting a hearing in their final House committee). The bills were then sent to the Senate Judiciary Committee, where they sat for days or even weeks without receiving a vote. (The compacts are opposed by the powerful trial lawyer lobby, which dislikes a provision in the compacts that prevents lawyers from suing the interstate compact commissions. These commissions are boards that oversee the implementation of each compact, made up of members appointed by all the participating states. There is no good reason to sue them, but the lawyers object to the idea of shielding anyone from potential lawsuits.)

House Bill 243, the physician compact, was finally brought up for a vote three days before the session adjourned. Unfortunately the Senate Judiciary Committee made significant amendments to the compact – deleting the language that the trial lawyers objected to – and because these compacts are essentially contracts among states, each state that wants to join must agree to the same language that other states have also approved. As a result, this compact bill died, as did all the others awaiting a hearing in Senate Judiciary.

Think New Mexico is working to win passage of these bills in a future session.

2) Senate Bill 176: Reform the medical malpractice system to center patient needs and safety

Senate Bill 176 proposed to cap attorney’s fees in medical malpractice attorney lawsuits, end lump-sum payouts from the Patient Compensation Fund (PCF), and send the majority of any punitive damages awarded in a medical malpractice cases to a new fund designed to improve patient safety.

New Mexico currently has the second highest rate of medical malpractice lawsuits of any state in the U.S., as well as unlimited punitive damages. Medical malpractice insurance premiums are about twice as high in New Mexico as in other states in our region, and they continue to rise rapidly.

The reforms in Senate Bill 176 have been adopted in a variety of other states from across the political spectrum. For example, 20 states cap attorney’s fees, including California, Connecticut, Delaware, Hawaii, Illinois, Massachusetts, Nevada, and Oregon. New Mexico currently has no limits on attorney’s fees.

Senate Bill 176 was based on the California model, which caps attorney’s fees at 25% of the money awarded if a case is settled, and 33% if a case goes to trial. Every dollar that goes to the attorney is a dollar that does not go to the injured patient.

New Mexico also recently began allowing lump-sum payouts from the Patient Compensation Fund (PCF). The PCF was created to make sure that patients who are injured by malpractice will have all of their medical needs paid for. Up until 2021, payments were made from the fund as a patient incurred medical expenses, for as many years as needed. By contrast, the lump-sum payout is meant to cover the patient’s medical costs for the rest of their life. However, it is based on an estimate, which may be wrong. In addition, the lawyer’s fee, which may be upwards of 40% of the total, now comes off the top immediately. As a result, a patient may very well run out of money for their medical care. Senate Bill 176 would return to the system that worked well for many years, which is having the PCF pay out medical costs as they were incurred by a patient injured by malpractice.

Finally, punitive damages are meant to be an extraordinary remedy, awarded in rare instances where it is necessary to punish someone for committing gross negligence or intentional harm. They are separate from compensatory damages, which are meant to compensate the patient. Unlimited damages are a windfall for the attorneys bringing the cases, but they undermine medical care across the state.

Three states, Alaska, Oregon, and Pennsylvania, instead use a significant portion of any punitive damage award should be used to benefit the public instead. Senate Bill 176 would send 75% of any punitive damages to a new fund earmarked for improving patient safety and reducing medical malpractice.

Senate Bill 176 unfortunately failed to pass the Senate Health and Public Affairs Committee on a 4-5 vote. Although this bill failed to advance during this session, it gathered impressive momentum and bipartisan support. Twenty-four bipartisan sponsors signed onto Senate Bill 176 (12 Democrats and 12 Republicans), more than any other bill this session.

New Mexico’s unbalanced medical malpractice law is also among the top three reasons why doctors retire early or leave the state, and this issue will only continue to become more urgent as the state loses more health care providers. Think New Mexico will continue working to advance these reforms in future sessions.

Issue Summary

Many New Mexicans struggle to access health care due to a growing shortage of doctors, nurses, and other health care professionals in the state. The number of primary care physicians in New Mexico fell by 30% from 2017-2021 and the numbers of ob-gyns, registered nurses, dentists, psychiatrists, pharmacists, and EMTs have also declined sharply in recent years. New Mexico has the oldest physician workforce in the nation, with nearly 40% of the state’s doctors aged 60 or older and expected to retire by 2030.

To reverse this growing shortage, in 2024 Think New Mexico published a new report proposing a ten-point plan with 20 separate legislative recommendations to make the state a more attractive place for health care workers to practice. Think New Mexico’s proposals include:

• Reforming the state’s medical malpractice act, since New Mexico currently has the second highest number of medical malpractice lawsuits per capita in the U.S. Recommended reforms include capping attorney’s fees; raising the legal standard for awarding punitive damages and capping them; and prohibiting the filing of multiple malpractice lawsuits over a single injury. These and similar reforms have already been implemented by other states from across the political spectrum, as detailed in Think New Mexico’s report.

• Joining all ten interstate healthcare worker compacts so that doctors, psychologists, and other providers licensed in other states can more easily provide care to New Mexico patients, including via tele-health.

• Creating a centralized credentialing system to reduce administrative burdens on doctors and other health care professionals and make it easier for patients to keep their providers when their insurance coverage changes.

• Making New Mexico’s student loan repayment program for health care professionals more competitive with the vast majority of other states, including all of New Mexico’s neighbors, which offer higher loan repayment amounts.

• Making New Mexico’s tax policy friendlier to health care workers by permanently repealing the state’s Gross Receipts Tax on medical services and increasing and expanding the Rural Health Care Practitioner Tax Credit.

• Enhancing Medicaid reimbursement rates to health care providers, since New Mexico has a higher proportion of patients insured by Medicaid than any other state, and Medicaid generally pays less than the cost of providing treatment. The report also recommends reducing the rate of Medicaid claim denials so that health care providers receive the full payment they earn for treating patients insured by Medicaid.

• Growing more of our own health care workers by expanding access to health-care-related career and technical education (CTE) in high school. Recommended reforms include providing liability protections to employers that offer CTE programs and revising the state’s CTE pathways so that more students earn certifications in high school (e.g., as EMTs or nursing assistants).

• Expanding access to higher education in health care fields by increasing salaries for the faculty training future health care professionals and providing a tax credit for the preceptors who provide community-based education for doctors, nurses, and others.

• Importing more international medical graduates into New Mexico by allowing fully trained and vetted doctors from other countries to apply for a provisional license to practice under supervision in the state for two years, after which they could apply for a full medical license.

• Using some of the state’s one-time surplus from oil and gas taxes to create a $2 billion permanent fund for health care to generate income to pay for these and other reforms in perpetuity.

Think New Mexico will be advocating for the enactment of its recommended reforms to address the health care worker shortage during the 2025 legislative session.

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News Coverage

Watch a report from KOB-TV 7 News 4 on how the medical malpractice environment increases the health care worker shortage • March 25, 2025 (4:33)

Read an op-ed by Michael Casaus and Naomi Natale about how joining the interstate compacts for health care workers would help their young son access cancer treatment • March 20, 2025

Read a series of columns from syndicated columnist Sherry Robinson about the impact of New Mexico’s medical malpractice laws on health care workers and patients:

• Patients Sound Off On Medical Malpractice Costs, February 17, 2025
• How Many Doctors Do We Have To Lose In New Mexico Before Lawmakers Act?, March 10, 2025
• New Mexico Doctors: ‘We Are Exhausted And Demoralized’, March 17, 2025

Read an op-ed by Kristina Fisher about why New Mexico should join interstate compacts for health care workers • March 7, 2025

Read an article from Source New Mexico about Think New Mexico’s legislation to bring New Mexico into the interstate compacts for health care workers • March 5, 2025

Read an article from El Rito Media about Think New Mexico’s legislation to bring New Mexico into the interstate compacts for health care workers • February 22, 2025

Read an article from El Rito Media about Think New Mexico’s medical malpractice bill gaining bipartisan support • February 25, 2025

Read an article from Source New Mexico about Think New Mexico’s legislation to reform New Mexico’s medical malpractice laws • February 21, 2025

Read an op-ed by Fred Nathan about the need for medical malpractice reform to address the health care worker shortage • February 2, 2025

Read an investigative article from Searchlight New Mexico about the dark money group opposing medical malpractice reform • February 25, 2025

Read an investigative article on the malpractice insurance crisis in New Mexico from Searchlight New Mexico • December 5, 2024

Read an op-ed by Katie Gutierrez about the benefits of creating a health care permanent fund • November 17, 2024

Read an op-ed by Alfredo Vigil about the benefits of joining interstate compacts for health care workers • November 10, 2024

Read a column by syndicated columnist Merritt Hamilton Allen about Think New Mexico’s initiative to solve the health care worker shortage • October 4, 2024

Watch a report from KOAT-TV 7 News on Think New Mexico’s initiative to solve the health care worker shortage • September 24, 2024 (2:09)

Read an article from the Santa Fe New Mexican about Think New Mexico’s initiative to solve the health care worker shortage • September 23, 2024

Read an article in the Albuquerque Journal about Think New Mexico’s initiative to solve the health care worker shortage • September 22, 2024