Leaders Make Case For, Against Expanding Medicaid Under ACA

The Texas rhetoric around a key facet of federal health reform — whether the state will expand subsidized insurance to its poorest adults — reached a high-water mark on Monday, with back-to-back press conferences at the Capitol featuring political leaders on both sides of the aisle.

Republicans including U.S. Sens. Ted Cruz and John Cornyn, Gov. Rick Perry, Lt. Gov. David Dewhurst and members of a  conservative think tank gathered first, reaffirming their opposition to expanding Medicaid, a key tenet of “Obamacare” that is widely supported by Democrats. The expansion — and, in particular, the flexibility the federal government has shown some Republican-led states in implementing it — has in recent months drawn the support of some fiscal conservatives reluctant to pass up billions of federal dollars and the opportunity to curb Texas' ranks of the uninsured.

"For those states buying into this, they will come to rue the day," Cruz said.

"When the federal government retreats," Cornyn added, "the state's going to be on the hook." 

The Republican event was followed by a Democratic one led by U.S. Rep. Joaquin Castro, D-San Antonio; his brother, San Antonio Mayor Julián Castro; U.S. Rep. Lloyd Doggett, D-Austin; and legislative Democrats. They demanded that state leaders find a way to draw down the federal money and lift Texas' stigma as having the highest uninsured population of any state. 

"Even though many states with staunch Republican governors have said expanding Medicaid is the smart thing to do, the governor has stubbornly refused to do so," Joaquin Castro said. 

Julián Castro said: "As elected officials, the public hires us not to do the ideological thing but to do the smart thing. People from across the political spectrum … have suggested that Texas should do the right thing and accept the expansion of Medicaid." 

Republican lawmakers want the Obama administration to give Texas a block grant for Medicaid, which the state would use to subsidize private health savings accounts for low-income recipients. Medicaid recipients would either enroll in a Medicaid managed care plan or be given subsidies on a sliding scale based on their income. The state would also likely include “personal responsibility” measures, such as higher co-pays for patients who went to the emergency room for minor ailments.

Perry said federal leaders need to "decide if they trust" Texas to run Medicaid as the state sees fit, and called the Obama administration "harder to deal with than previous administrations." But when asked whether he, Cruz or Cornyn had reached out to begin negotiations with the Obama administration on ways to reform Medicaid with federal dollars, Perry said that was the job of the Legislature and the state's health and human services commissioner. 

Most state leaders acknowledge that the federal government is unlikely to give Texas a "no strings attached" block grant. In the current system, Texas receives roughly $60 in federal matching funds for every $40 the state spends on Medicaid services.

If Texas reached an agreement with the federal government to finance Medicaid through a block grant, the state would receive a predetermined amount of federal financing to run the program. By comparison, if the state expanded Medicaid under the federal Affordable Care Act, the federal government would cover 100 percent of Medicaid expansion enrollees' health care services for three years, then slowly reduce the matching rate to 90 percent.

Billy Hamilton, the state’s former chief revenue estimator and former deputy state comptroller, was flanked by Democrats at Monday's pro-expansion press conference. He estimates the Medicaid expansion would cost Texas $15 billion over 10 years, while allowing Texas to draw down $100 billion in federal financing — a deal that Texas should not pass up. 

Doggett called passing it up “unconscionable.” 

"Is there a way out of this impasse?" he asked. "I think there could be if people with good faith are willing to work toward that resolution." 

Perry argues that if Texas expanded Medicaid, the program would go from taking up roughly a quarter of the state budget to a third.

"Proponents of expansion insist it's a good deal," he said. "...Texans know there is no such thing as free money."