Penelope McMullen lived without health insurance until she was 63, when she was diagnosis with autism.

Now, seven years later, the prospect of life without health insurance scares her, she told an auditorium full of people Tuesday, Aug. 2, in Santa Fe.

"People tell me I'm a different person," McMullen said, noting how her life changed after she was enrolled in Medicaid, the government health insurance program for low-income people that covers one in every four New Mexicans.

"I can hardly believe," said McMullen, pausing to compose herself after choking up, "that after falling through the cracks for 63 years that I might fall through the cracks again."

McMullen directed her remarks at officials from Gov. Susana Martinez's administration, which hosted a public hearing at the Willie Ortiz Building on Cerrillos Road to receive input on the state's goal of redesigning Medicaid.

Tuesday's meeting was the second-to-last forum this summer before the New Mexico Human Services Department starts to put pen to paper this fall — changing the Medicaid program.

As state officials write that plan, they will start a conversation with the federal Centers for Medicare & Medicaid Services, which must approve any plan before the state can implement it. The Martinez administration hopes the federal government will grant New Mexico more flexibility in running the government program through a waiver.

"By mid-to-late 2012, we hope to submit the waiver request to (the Centers for Medicare & Medicaid Services) for their approval," agency spokesman Matt Kennicott said.

But on Tuesday, there were no firm details on what would show up in the final plan, agency officials told a crowd of about 100 people at the hearing.

And that rankled a few people. George Gamble seemed to speak for many in the audience when he asked when a proposal would become public.

"People have all kinds of ideas, but without a framework, it makes it very difficult for us to be specific," Gamble said.

"When we know how we will restructure the program, it will be made public," said Julie Weinberg, state director of Medicaid's Medical Assistance Division.

"Will that be a fait accompli?" Gamble asked.

Jim Jackson, executive director of Disability Rights New Mexico, also noted the lack of details disapprovingly.

"We're all a little bit nervous about (the waiver) since that would put so many aspects of Medicaid up in the air," he told state officials.

The administration is taking on the redesign of Medicaid, dubbed "Medicaid modernization," to save a program state officials say is unsustainable because of fast-rising costs. But no final decisions have been made about what will change, state officials said.

Jackson also challenged the administration's view that Medicaid is unsustainable. "This program is not unsustainable," he told state officials. "To say that it is an excuse to cut the program."

State officials have said repeatedly that their intention is not to trim Medicaid's rolls, but to control spending in a program that has added tens of thousands of New Mexicans in the past three years as the economy has cratered. Add to that the fact that an additional 130,000 to 170,000 New Mexicans are expected to enroll in Medicaid in 2014, when a major provision of the nation's new health care law takes effect.

While details of the Martinez administration's redesign were scarce Tuesday, state officials pointed to several principles that will guide the state's direction:

• Increase Medicaid recipients' personal responsibility by imposing copays for some high-cost services but also rewarding good behavior, such as a recipient's decision to quit smoking. 

• Put into place pay-for-performance targets that encourage better health care outcomes than paying for the quantity of services a provider gives. 

• Ask the federal government for a "global waiver" to get rid of some of the bureaucratic layers in New Mexico's current Medicaid program, including possibly reducing the number of managed-care companies New Mexico currently uses. 

Decreasing the influence of managed-care companies was a popular theme at Tuesday's meeting. In recent years, New Mexico has increasingly relied on management-care companies to the point that $2.46 billion of the state's nearly $3.9 billion Medicaid budget — most of which is paid for by the federal government — is now handled by private-sector, managed-care organizations.

Meanwhile, Craig Acorn, managing attorney at the New Mexico Center on Law and Poverty, challenged the state's goal of making Medicaid recipients more responsible for their own health.

Speaking of the Human Services Department, Acorn said the agency uses "language like, 'Studies have shown that people with skin in the game use their health care more wisely.' There's no one who has more actual skin in the game, not metaphorical skin, but flesh, in the game of the health care" than recipients.

Figuring out how to save large pots of money from Medicaid won't be easy, however.

Elderly and disabled individuals make up about 19 percent of New Mexico's Medicaid enrollees, and they represent about 46 percent of the program's spending totals, according to agency documents.

Contact Trip Jennings at 986-3050 or at tjennings@sfnewmexican.com.