Will Gov.-elect Abbott eye Medicaid expansion dollars?

In the weeks since the November election, three anti-“Obamacare” Republican governors are attempting to parlay Medicaid-expansion dollars into insurance access for their low-income constituents.

Will Gov.-elect Greg Abbott do the same in the Lone Star State?

Gov. Bill Haslam of Tennessee last month said the Obama administration verbally has approved a plan that offers vouchers to people earning up to 138 percent of the federal poverty level — or about $16,100 for an individual — to help purchase employer coverage. Other newly eligible individuals can sign up in health plans modeled after health reimbursement accounts, with people earning above the poverty level required to pay premiums and copayments.

Republican governors Matt Mead of Wyoming and Gary Herbert of Utah have proposed similar plans. Nine Republican governors have expanded insurance coverage using federal Medicaid expansion dollars.

The Texas Senate Committee on Health and Human Services left a crack in the door for a similar approach. Its interim committee report did not rule out the pursuit of a Medicaid waiver similar to Tennessee’s to provide private health coverage expansion.

According to a November estimate by the Kaiser Family Foundation, nearly a million Texans fall into what is known as the “coverage gap,” which includes people who earn too much to qualify for the existing Medicaid program but not enough to qualify for subsidies to purchase private coverage on the health insurance marketplaces.

Arkansas, Iowa and Michigan have expanded through federally approved Medicaid demonstration projects, or “waivers.”  Waivers provide states additional flexibility in how they operate their Medicaid programs. In approving the Arkansas, Iowa and Michigan expansion waivers, the federal government allowed those states to, for example, enroll some or all of their newly eligible Medicaid beneficiaries in private coverage offered through the health insurance marketplaces, and to charge some beneficiaries modest premiums.

Future state decisions about the Medicaid expansion will likely be as much about how to expand as about whether to expand.

Expanded health coverage for the poor has been endorsed by the Texas Institute of Health Care Quality and Efficiency, which consists of 15 members appointed by Gov. Rick Perry.

One of the appointed members, Joel Allison, CEO of Baylor Scott & White Health says, “We must consider innovative ways to provide improved, sustainable access to care for the uninsured of Texas.”

“We should be maximizing available federal funds through the Medicaid program,” Allison said. “Our rate of uninsured in this state, the highest in the U.S., is unacceptable.  We have a moral imperative to address it and improve health care for all Texans.”

Regardless of their form, these extra federal dollars would:

  • Stimulate economic development. The rule of thumb is that every federal dollar that enters the state generates $2 more in local economic development. That means more jobs and higher sales tax revenue.
  • Ease the burden significantly on local hospital districts. By law, county taxpayers must fund the health care of uninsured Texans. Not expanding Medicaid shifts costs from the federal and state governments to local taxpayers. Texas county governments spend more than $1 billion annually on indigent health care.
  • Shield Texas employers from Affordable Care Act penalties. An employer may be at risk of penalties if an employee accesses exchange subsidies, but not if that same worker would access the Medicaid program. An employer is penalized up to $3,000 per employee if it offers health insurance that either costs more than 9.5 percent of earnings or pays less than 60 percent of covered benefits. That is difficult to do for low-income employees. A Jackson Hewitt study estimates the price tag for Texas employers could be as high as $400 million annually.

Not accepting more federal funding shifts more of the cost burden of uncompensated care to Texas businesses, as well as state and county taxpayers. For example, Baylor University Medical Center lost $172.8 million on uncompensated care in 2013.

Another opportunity for a “Texas solution” awaits in 2017. Buried in Section 1332 of the Affordable Care Act (ACA) is a waiver that offers states wide latitude for customizing health delivery reform. States at that time can request that the federal government waive basically every major coverage component of the ACA, including exchanges, benefit packages and the individual and employer mandates. State reforms must ensure “affordability,” cover a “comparable” number of people as statutory ACA implementation would have and not increase the federal deficit.

The federal government clearly is becoming more flexible on what constitutes Medicaid expansion. Meanwhile, some Republican governors are seeing a way forward on how to pump billions into their state coffers without forgoing their conservative principles. It should become clearer in the first half of 2015 whether Texas is inclined to follow suit.

About the author

Steve Jacob
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Steve is a senior marketing and public relations consultant for Baylor Scott & White Health. He spent nearly four decades in newspaper and magazine editorial and business management and is the author of two books on healthcare reform. He was also the founding editor of D Magazine's D Healthcare Daily.

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Will Gov.-elect Abbott eye Medicaid expansion dollars?