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Thursday, April 11th 2013

Medicaid Oh, Medicaid

Texas is still one of several states, dominated by Republicans, looking to refuse Medicaid expansion. Just to rehash Medicaid is a program aimed primarily at the poor and near poor. It is a state-federal partnership with the federal government poneying up at least 50% of the funds for the program in each state and sometimes substantially more based on a formula derived from the per capita take home income of each state. In turn to get the federal money the states have to have minimum enrollment requirements.

The Affordable Care Act hoped to substantially expand Medicaid. The idea was for each state to expand Medicaid eligibility to cover anyone below 133% of the federal poverty level.

Now, the federal government can’t usually dictate things to states from on high. But what it can, and often does, is tie federal money to state compliance with federal decrees. In such away the Affordable Care Act called for states to expand Medicaid or to risk losing all their current Medicaid money. They brought more than the stick though. Unlike current Medicaid enrollees, whose costs are borne about 50% by Washington, the federal government promised to cover 100% of the costs for these new Medicaid enrollees for a decade and then 90% from then on.

However the Supreme Court decision which upheld most of the Affordable Care Act, did deal a small blow to it by ruling that the federal government could not tie current Medicaid funding to the states expanding Medicaid to everyone below 133% of the poverty line.

Basically states do not have to implement Medicaid expansion as envisioned in the Affordable Care Act and they can’t be penalized for not doing so. The ruling prompted a number of Republican governors, opposed to the Affordable Care Act, to make it clear their states would not expand Medicaid. Amongst the most vocal was Rick Perry of Texas. Unlike some governors Perry has not come around.

Conservative opposition to Medicaid expansion is putting them increasingly in awkward positions. The expansion has strong support amongst the business community, typical Republican supporters.

“This may be the only time that we have taken an actual formal position that is opposite that of the governor,” said Richard Dayoub, chief executive officer of the El Paso Chamber of Commerce. “I don’t know of any issue that has created so much concern across the state and has amassed so much support across party lines and throughout the business sector.”

As well, the costs of health care for the people who would potentially be covered by Medicaid (and are currently covered by nothing) is generally burdened at a more local level. For instance counties or their hospital districts picking up the tab for the uninsured with property taxes. It is much less from the state. And so some Republican politicians in the House and Senate and certainly in local government are loathe to turn down what amounts to massive cost shifting – from counties paying to care for these people to the federal government paying counties to care for these people.

What Perry, and other holdout Republicans, may be looking for is further concessions from the federal government on just how much leeway states will have in designing their Medicaid programs. I don’t think there’s any doubt that if the federal government gave Texas a block grant and pulled away all the strings but the minimum enrollment that even Governor Perry would cave.

Conservatives who hate President Barack Obama’s health law have been agitating to convert Medicaid into a no-strings-attached block grant for states since the Reagan era. That effort died — or at least got put on indefinite hold — with Obama’s reelection. But red-state governors see another chance to ram through some of the changes they seek. Ironically, their opening was created by the health law’s Medicaid expansion.


Rather than put new enrollees in the “broken” Medicaid system, these governors want to buy private health insurance plans for this low-income population using Obamacare funds and, in some cases, using the Obamacare health insurance exchanges. It’s all subject to a lot more negotiation and boundary-setting with the Department of Health and Human Services, but talks continue and both sides are holding their breath for a breakthrough on the “private option.”

To be honest I think Medicaid expansion will happen in Texas, even if not on the Affordable Care Act schedule, in short order for fewer concessions than the dream above. But it isn’t looking like an easy road

[I]t is politically risky for anyone in the Legislature to make the first move, because Perry can — and presumably would — veto any legislation that would expand Medicaid. So far, Perry and his staff have not provided any guidance on what type of reform plan they would consider acceptable, except the pursuit of a no-strings attached block grant that would allow the state to redesign Medicaid without the intervention of the Obama administration. They haven’t endorsed expansion of Medicaid even if the state were to receive a block grant for Medicaid.


Sen. Tommy Williams, R-The Woodlands, and Rep. John Zerwas, R-Simonton, this week disclosed details — albeit fuzzy ones — on a plan to subsidize private health plans for people potentially eligible for Medicaid expansion. And they’ve taken an idea from former executive health commissioner Tom Suehs to use new revenue collected from policies purchased through the health insurance exchange as the state’s match to draw down the federal expansion dollars.

“What we’re looking for is an absolute source of revenue that has some certainty to it,” said Zerwas. “This allows us to comfortably draw down the money from the federal government.”.


Texas cannot draw down the federal expansion dollars to subsidize private plans without receiving a waiver from or an agreement with the federal government. So far, Arkansas’ agreement with the federal government is the only available model for what the administration is willing to agree to in exchange for allowing the state to subsidize private plans.

The federal government gave Arkansas permission to use Medicaid expansion dollars to subsidize private coverage on the condition that the state provide any Medicaid benefits the recipients are not offered by their private plans. It’s referred to as a “wraparound” benefits model, and in essence, still requires Arkansas to expand its existing Medicaid program by some amount.

“This seems like the worst of both worlds. I’m not interested in doing that,” said Williams of Arkansas’ plan.

I do think we’ll get Medicaid expansion in Texas. We, and a few other states, might be late to the table. But it is almost inevitable that eventually Texas will come into line in providing coverage for all those up to 133% of the poverty line. It may just be a rough road to there.