University of New Mexico director: State’s economy needs a boost
(The Center Square) – New Mexico has one of the largest percentages of its population reliant on Medicaid, and that’s reflective of the state’s overall economy.
In an editorial, the Albuquerque Journal reports 43% of the state’s population is enrolled in Medicaid and three-quarters of the state’s births are funded through the state-run health care program for those with low incomes.
During the COVID-19 health crisis, enrollment grew 1.5% every month as the state clamped down with especially tight restrictions, tighter than most other states.
Drawing a correlation between the excessive number of New Mexicans dependent on Medicaid and the health of the state’s economy, the Journal’s editorial board urged that something be done to pull the state’s population up into financial independence and pointed to the private sector as the solution.
Employment, Gross State Product (GSP), and personal income are the typical metrics used to measure the health of an economy, according to Michael O’Donnell, acting director at the University of New Mexico Bureau of Business and Economic Research.
These indicate the economy needs improvement, but it’s not as simple as saying the private sector needs to come in and fix everything, he said.
“I think [high Medicaid dependence] is a symptom of New Mexico being a state that tends to perform poorly relative to a lot of other states in many of the key economic metrics, but you know if the solution to the problem is, well, we just need the private sector to come and it makes things better, then I don’t think that’s the solution,” O’Donnell told The Center Square.
New Mexico’s economy is different compared to other states, he added.
“New Mexico doesn’t really have the type of population base that maybe other places in the region have that are able to draw the bigger businesses and companies to the area that we’ve kind of seen in the past,” he said.
Trying to grow New Mexico in a similar way to Arizona or Colorado doesn’t work, he said, because the state doesn’t have a comparable depth of labor force.
While growing the private sector should be a key focus, O’Donnell also said that government needs to maintain a supportive posture.
Another piece of the economic puzzle dates back to the Great Recession. Before that event, the state’s economy was in decent shape, performing slightly above average, said O’Donnell. But after, New Mexico was slower than the rest of the country to bounce back.
Reports indicated New Mexico was just getting back to where it was pre-Great Recession before the coronavirus hit, according to O’Donnell. Now, many of the state’s critical industries like oil and gas and hospitality are taking a hit.
As the entire country attempts to recover from the health crisis, New Mexico’s economy is showing signs of sluggishness compared to neighboring states, and O’Donnell said experts are worried the state is headed for a similar stagnation.
The fact that New Mexico’s industries have been kept from reopening as quickly as other states because of its stringent restrictions may turn out to be the sole cause, however, he said.
Disclaimer: This content is distributed by The Center Square
