Lawmakers Seeking "Texas Solution" to Medicaid Reform

Momentum is building in the Capitol to find a "Texas solution” for reforming — and possibly expanding — Medicaid, the joint state-federal health program for children, the disabled and the very poor. The influential House Appropriations Committee plans to discuss options for Medicaid reform on Friday.

Although the House GOP caucus overwhelmingly voted Monday to reject the version of the Medicaid expansion called for in the Affordable Care Act, lawmakers left the door open to discuss other possibilities for reforming Medicaid and drawing down dollars from the federal government. Since the vote, House Speaker Joe Straus has put pressure on House members to present a clear proposal for how Texas should reform Medicaid, and he hasn't ruled out negotiations with the Obama administration that could lead to the expansion of the program — on Texas' terms.

“After you say ‘no,’ the next question is, ‘Okay, then what?’ And we need to move now on something that is more specific that we can put on the table and negotiate,” said Straus, R-San Antonio. “I’m just trying to move the conversation forward on something we can agree is good for Texas and see if there’s some flexibility."

While eight Republican governors have struck deals with the federal government to expand Medicaid, Gov. Rick Perry has remained firm in his opposition. “What he is interested in, and for years has called for, is more flexibility from the federal government so we can tailor the way we deliver health care to address our specific challenges,” Lucy Nashed, a spokeswoman for the governor, wrote in an email. 

Interactive Quiz: Should Texas Expand Medicaid?

If Texas spent $15 billion to expand Medicaid coverage to 1.8 million low-income adults, the state could draw down $100 billion in federal financing over 10 years, according to an analysis by Billy Hamilton, the state’s former chief budget estimator. Hamilton argues the Medicaid expansion would halve the state's uninsured rate — the highest in the nation at 24 percent — and substantially relieve uncompensated care costs shouldered by hospitals and local government entities, which in turn could reduce local tax rates and private insurance premiums.

Progress Texas, a liberal nonprofit, has compiled a list of more than 70 organizations that support a Medicaid expansion in Texas. The list includes 11 chambers of commerce and eight local governments. Texas' two largest health trade organizations, the Texas Medical Association and the Texas Hospital Association, have also endorsed the Medicaid expansion — as long as state lawmakers also implement reforms to improve the current system.

But Texas Republicans have consistently argued that Medicaid is “broken.” Costs have grown exponentially in recent years, and in some areas of the state, there are not enough providers willing to participate in the program to ensure patients have adequate access to care. As a result, they argue that Texas should refuse expansion without comprehensive reform.

“There seems to be much ado about saying 'no,' without coming up with solutions that work, but this is a process and we would be falling short of what Texans deserve if we were not vetting these issues,” said Rep. Brandon Creighton, R-Conroe, chairman of the House GOP caucus. 

Many Republican leaders — including Perry, Straus and Creighton — have specifically mentioned the possibility of requiring co-payments or other cost sharing measures to ensure Medicaid recipients have “skin in the game.”

Some state senators have also shared ideas for reforms that could allow Texas to draw down federal expansion money.

State Sen. Tommy Williams, R-The Woodlands, chairman of the Senate Finance Committee, has outlined a Medicaid reform plan that would include co-payments and deductibles for Medicaid recipients. It would also include reimbursement rates for doctors that are designed to encourage better patient outcomes, along with an expansion of Medicaid managed care to streamline services and give the state flexibility “to develop tailored benefit packages” for Medicaid recipients' different health needs.

Meanwhile, state Sen. Bob Deuell, R-Greenville, vice chairman of the Senate Health and Human Services Committee, has suggested Texas should reject federal Medicaid expansion financing, but apply for a block grant that would allow the state to subsidize private insurance plans for poor Texans through an Orbitz-style health insurance exchange.

Any such proposal would have to be approved by the Obama administration, which has been hesitant to offer block grants but has shown willingness to negotiate with states to reduce the ranks of their uninsured. 

“Gov. Perry is a good negotiator, and I don’t think he’ll make a bad deal for Texas,” Straus said. “At this point, I want the Legislature to be a good, supportive partner in trying to work out something that does make sense for Texas and Texas taxpayers.”