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Sunday, November 7th 2010

State Options Under Obamacare

The Texas Tribune quotes some senior Texas legislators and a Heritage Foundation study looking at what might happen if Texas opted out of Medicaid/SCHIP.

Medicaid and SCHIP are federal grant programs. The federal government encourages states to cover their citizens, of certain eligibility, under Medicaid and SCHIP by funding 60% of the cost of the programs. But the states could turn down that federal money and simply not participate in the programs and, potentially save themselves the 40% of the costs that they shoulder.

As the Texas Tribune says,

Moderate Republicans are studying it behind closed doors. And the party’s advisers on health care policy say it’s being discussed more seriously than ever, though they admit it may be as much a huge in-your-face to Washington as anything else.

[Says] State Rep. Warren Chisum, R-Pampa,“This system is bankrupting our state….We need to get out of it. And with the budget shortfall we’re anticipating, we may have to act this year.”

The two questions are whether those currently served by Medicaid and SCHIP get worse care should those programs be replaced by something else and how much could Texas actually save by pulling out of Medicaid and SCHIP.

State Rep. John Zerwas, R-Simonton, an anesthesiologist who authored the bill commissioning the Medicaid study, said early indications are that dropping out of the program would have a tremendous ripple effect monetarily. He is not ready to discount the idea, he said, but he worries about who would carry the burden of care without Medicaid’s “financial mechanism.”

“Because of the substantial amount of matching money that comes from the federal government, there’s an economic impact that comes from that,” Zerwas said. “If we start to look at what that impact is, we have to consider whether it’s feasible to not participate.”

You would have to believe that Medicaid and SCHIP would have to be replaced by something. But it’s difficult to imagine the state providing something on the order of similar health care access for a similar number of people with substantial savings. You’d have to sacrifice the former for any sort of budget benefit I would imagine. But I guess we’ll see as this new legislature comes together in Austin.