Medical Malpractice Success a win, but more needed

By Paul J. Gessing

The passage of medical malpractice reform is the most important public policy success in New Mexico in more than a decade. It took support from New Mexicans of every political stripe and a bi-partisan coalition in the Legislature to achieve this success, but at long last the State's malpractice-driven doctor shortage may be over.

In addition to the medical malpractice bill, the Legislature entered New Mexico into the national doctor compact and enacted a $10K tax credit for physicians. Combined, this may be enough to start turning the tide. It is cause for celebration, but please don't misunderstand, New Mexico still faces major challenges in attracting and retaining doctors.

Rather than being lulled into believing that the problem has been solved, New Mexicans need to focus on additional ways to make our state more attractive for doctors. The good news is that many needed policy changes, if enacted, would make New Mexico more attractive for other professionals as well. The bad news is that it took such overwhelming support and effort from all sides of the political spectrum to get essential medical malpractice reforms through the Legislature. It will be hard to marshal the same resources and political consensus in the future.

In fact, the Legislative Finance Committee in its pre-session survey of medical providers and why so many of them are considering leaving, found that behind medical malpractice and punitive damages, the next biggest issues facing doctors were issues around "quality of life" and "compensation."

While the victory on medical malpractice this session was challenging enough, solving issues around quality of life and compensation could be even more of a challenge, especially for New Mexico's majority Democrats. After all, "compensation" at least partly means long-overdue reforms to the gross receipts tax, it also means New Mexico's top income tax rate is too high, and with so many in our state on Medicaid, the program offers a lower reimbursement rate than does private insurance.

The gross receipts tax remains a big, unnecessary problem for the medical field. In 2026 SB 133 was introduced. It proposed to deduct receipts from selling in-office, non-diagnostic equipment to healthcare practitioners. Another bill, HB 338, would have extended New Mexico's GRT deduction for medical deductibles and copays beyond the current exemption's 2028 expiration deadline (just two years away).

Both these concepts should be adopted and soon. Better yet, the gross receipts tax needs to be thoroughly reformed to remove business inputs from taxation. Such a move would benefit all areas of the economy including the health care sector. And, considering how much was spent in growing government this session the State clearly has plenty of money available despite lower oil prices.

Quality of life issues are even more difficult. While New Mexico's weather, mountains, and culture are considered unique in good ways, the state’s crime problem (especially in Albuquerque) and its poor schools are big challenges that require bold reforms. Of course, the GRT, New Mexico’s high poverty rate, poor schools, and high crime are nothing new to policymakers.

In fact, there are clear and obvious reforms that would unleash New Mexico’s economy, especially at a time of record oil and gas revenues, but our Legislature and Governor have refused to make necessary reforms for many years, even a few years ago when our State had multi-billion-dollar budget surpluses.

Positive change in New Mexico comes hard. It’s why we tend to rank poorly on so many state comparison lists. Medical malpractice is a massive “win” for New Mexico and those seeking medical treatment here, but there is much more to be done to make New Mexico an attractive destination for highly paid professionals, medical or otherwise.

Paul Gessing is president of the Rio Grande Foundation, an Albuquerque-based think tank focused on the importance of individual freedom, limited government and economic opportunity. Matt Nese is vice president of People United for Privacy Foundation, a nonprofit that defends the First Amendment rights of all Americans to come together in support of their shared values.