After Health Reform Ruling, Texas Has Big Decisions to Make

In the wake of Thursday's U.S. Supreme Court ruling upholding federal health reform, Texas has two big choices to make: whether to accept federal funds to expand Medicaid, and whether to roll out a consumer marketplace for comparing and purchasing insurance coverage. 

While the Supreme Court found the Affordable Care Act's expansion of Medicaid constitutional, it held that states can't be penalized by the federal government if they choose not to accept federal funding and do it. Republican Texas Attorney General Greg Abbott, who sued the federal government over "Obamacare" on Texas' behalf, said it's not yet clear whether Texas will opt out of the expansion — and the associated funding.    

“That is a policy decision the policy-makers in Austin are going to have to make,” he said.

But in a statement, outgoing Texas Health and Human Services Commissioner Tom Suehs left the door wide open for rejecting the federal funds, saying he was “pleased” that the Supreme Court gave states “more ability to push back” against the Medicaid expansion.

The Affordable Care Act requires every state to have a health insurance exchange — a kind of Orbitz for medical coverage — and says that if states don't do it, they'll get a one-size-fits-all federal plan instead. 

In a conference call on Thursday, Abbott said he's unsure if and how Texas will set up an exchange, but that Texas will have to “move swiftly." “That will have to be hammered out in the coming weeks and months,” he said.

Last session, efforts to lay the groundwork for a Texas health insurance exchange were rebuffed by the state's Republican leadership — even when one key House Republican crafted the legislation. Now, time is of the essence, and the Legislature doesn't meet again until January. 

In the meantime, Texas could establish a state-run exchange through an executive order or via a government agency, said Kandice Sanaie, the governmental affairs manager at the Texas Association of Business. The association, which ardently opposes the individual mandate the Supreme Court upheld, worked with other groups last session to try to get a state-run exchange passed, Sanaie said. The bill failed to make it out of committee.

Gov. Rick Perry "was still running for president at that time, and no one wanted to connect Texas with what was going on in Washington,” she said. 

Now, Sanaie said, the political climate has changed enough that she believes it is possible the state will move to create its own insurance exchange. But Democratic state Rep. Garnet Coleman of Houston, a proponent of federal health reform, said that would require a dramatic change in Perry’s stance.

Both Sanaie and Coleman said they do not believe the state can afford to wait until the next legislative session to design an insurance exchange, adding that the benefits of a successfully implemented state-run exchange would trump those of a federal one.

“We have the ability to solve problems and craft solutions that take into consideration our uniqueness as a state,” Coleman said. But he said he is glad the state will be required to opt into some kind of exchange “whether or not somebody like Rick Perry said no.”

There has not been much public discussion about how the state would go about creating an exchange, Sanaie said. But, she said she “has confidence” state officials have begun examining potential strategies. State health officials have said they've been working behind the scenes to make sure Texas wasn't left in a lurch if federal health reform was upheld — and that instituting an exchange wouldn't be too taxing. 

The Medicaid expansion, if implemented, is targeted at poor adults — those who can’t afford to buy insurance through the exchange. In a press release, Texas Hospital Association President Dan Stultz said the Medicaid expansion is essential to financially support the Affordable Care Act. “Without the Medicaid expansion, many will remain uninsured, shifting costs to the insured and increasing uncompensated care to health care providers,” he said. 

In addition to their decisions about the Medicaid expansion and the health insurance exchange, Texas Republicans face another question — whether to file more litigation. Abbott said he will work with Congress to attempt to have the law repealed, and that the state will explore “all possible avenues” to further litigation against "Obamacare." But he said it is hard to tell what aspects of the law that litigation might target.

“We don’t want to do ready, fire, aim,” Abbott said. “Let us look at it — analyze it — before we start discussing what further legal action could be lodged.”