Despite Health Care Ruling, the State Can Wait

The U.S. Supreme Court’s decision to uphold federal health reform — but to make the Medicaid expansion it requires essentially optional — has created, in the words of Donald Rumsfeld, a lot of “known unknowns” for Texas.

Will the state reject more than $100 billion in federal dollars over the next several years to cover more poor people under Texas' safety-net insurance plan? Will it establish a state-specific health insurance exchange — effectively an online marketplace for competitive rates — or let the feds do it instead?

But these decisions, choices that seemed so urgent just a week ago, probably aren’t imminent. That’s because of the “unknown unknowns” — what the November election and a possible Mitt Romney presidency could mean for health reform’s implementation.

Romney has said if elected, he’d fight for repeal of “Obamacare,” or simply grant states waivers to opt out of health reform. That gives states like Texas little motivation to really work at implementing federal health reform until they know what happens in November.

And even if voters send President Obama back to the White House, the Medicaid expansion isn’t supposed to start until 2014. There’s an entire five-month legislative session in Texas between now and then, where the debate over accepting the federal funding — at a cost to the already strapped state budget of about $6 billion between 2014 and 2019 — could prompt other as-yet unknown courses of action.

“Our take,” Health and Human Services Commission spokeswoman Stephanie Goodman said, “is that it will be a legislative decision that will be debated during the session.”

Hospitals in particular have a tricky tightrope to walk: They must convince the state not to reject the federal funding for a Medicaid expansion, but craft their message in a way that resonates with an anti-Washington governor and the ruling party's Tea Party base.

For hospitals, an expansion of Medicaid means less uncompensated care and more revenue — which translates into increased stability at a time when they’re already facing a restructuring of how they receive state and federal reimbursement. Rejecting the federal funds, they argue, would soon leave Texas with a bigger population of the uninsured than there is today.

But the big suits steering Texas’ major hospitals know they’re not sympathetic enough figures to ask for the Medicaid expansion on the basis of their bottom lines. Instead, they’ll argue that the state’s rejection of the federal funds would shift costs back to the Texas consumer two-fold — via the taxes they pay, and via rising health insurance premiums.  

One possible scenario Texas lawmakers could consider: If they don’t want a statewide Medicaid expansion, they might give regions or local hospital districts the green light to try to negotiate with the federal government for their own communities. Some health reform supporters fear this could create a scenario of the haves and have-nots — one called it a school finance Robin Hood plan “on steroids” — depending on which communities have the local tax base to pay their contribution to the Medicaid expansion. (Goodman said such a possibility isn’t yet clear.)

Another: It would be a big loss for the Centers for Medicare and Medicaid Services (CMS) if Texas, the state with the highest percentage of uninsured residents, didn’t partake in the Medicaid expansion. That gives state leaders quite a bit of leverage. Gov. Rick Perry, who, unlike some other conservative state governors, hasn’t flat-out rejected the Medicaid expansion, could bargain with Washington to get a waiver to design the roll-out the way Texas wants, including staggered coverage or a system that requires enrollees to have more skin in the game. 

Perry “hasn’t said yet what he plans on doing, which gives me a lot of hope,” said state Rep. Garnet Coleman, D-Houston. Coleman said while history would indicate Perry won’t accept the money, “things change.”

“If we listen to what he has to say, if we create a dialogue between CMS, between state legislatures across the country, we might see what it is they want in the package that would persuade them to move forward," Coleman said.