Abbott Courts Federal Health Care Money, Emails Show

Shortly before 1 a.m. on July 15, Gov. Greg Abbott sent an email from his personal account to his top advisers about an editorial published by the Houston Chronicle.

Its author, Ken Janda, had written that Texas' health care safety net system for the poor and uninsured was “in serious danger of meltdown" because state leaders were refusing to expand health coverage to a million uninsured Texans living in poverty.

The governor told aides he wanted to “see the financials” of Janda’s nonprofit Community Health Choice, a health insurer affiliated with the Harris Health System, one of Texas’ largest public hospitals.

“I’m told by informed sources that most of these entities are rolling in dough,” Abbott wrote.

The governor's skepticism about how big a financial hit Texas’ public hospitals are taking by caring for the state's sizable uninsured population is a crucial consideration to a $17.6 billion problem Abbott inherited when he was elected last year.

That's the size of a pot of mostly federal money — known as the uncompensated care pool — that for four years has reimbursed Texas’ safety-net hospitals for care they provide to people who cannot afford to pay. The Obama administration has made clear the future of that funding, which expires in September 2016, could be in jeopardy because of the state's refusal to expand government health coverage to the poor through Medicaid.

Abbott has accused the Obama administration of “coercive tactics” in its method of doling out hospital funding. But emails obtained by The Texas Tribune show the governor and his advisers are actively pursuing negotiations with the feds about how to hold on to as much of that federal money as possible.

At 6:30 a.m. on July 15, Abbott’s policy director Drew DeBerry forwarded the governor's note about the editorial to other aides, asking them to compile information about the hospital system’s profits.

“By engaging in this ridiculous editorial, this specific hospital has now put themselves on the list” of facilities whose finances the aides should review, DeBerry wrote.

Kara Crawford, a policy adviser to the governor, wrote back to DeBerry at 12:36 p.m. that Janda's Community Health Choice insurance plan operated at a net gain of $16 million in 2014. But the public hospital system in Houston that it's affiliated with, Harris Health, nonetheless reported a net loss that year of about two percent, she said.

“Some public hospitals and perhaps some private hospital systems are hurting financially overall,” Crawford wrote. “However, for a health plan that’s not hurting financially — far from it — to write an editorial like this wasn’t a good strategy. We still need the waiver to keep publics afloat, but Harris Health should have plead [sic] their own case.” 

Earlier this year, the Harris Health System laid off more than 250 employees to help alleviate a $72 million deficit. Government funding to pay for the hospital’s uncompensated or “charity care” made up 21 percent of its revenue in 2013, with $395 million coming from the uncompensated care pool. The hospital system says its patient base that year was 57 percent Latino and 26 percent African American. 

Janda and Harris Health System President George Masi declined, through a spokesman, to be interviewed for this article. 

Abbott’s office did not provide the exchange in response to an open records request for the governor's emails. The Tribune obtained the correspondence through a public information request to the Health and Human Services Commission.

The email exchange came two weeks after Abbott had a staff briefing about the federal hospital funding on July 1, and six days after Chris Traylor, the health agency’s executive commissioner, met with the governor’s staff about the same topic, according to official calendars.

Two Abbott spokesmen did not return multiple requests for comment, including a request for details about the meetings.

The Obama administration in 2011 approved Texas’ uncompensated care pool as part of a five-year, $29 billion Medicaid “transformation waiver.” The waiver was intended to help Texas expand its managed care system for Medicaid patients and to cover spiraling uncompensated care costs borne by hospitals. 

Texas must reapply for the waiver funding by the end of the month. But that process has been complicated for the state because its Republican leadership has since refused to expand Medicaid under the federal Affordable Care Act, leaving uninsured nearly 1 million residents who would have been eligible for coverage under the expanded program.

Abbott and other Republicans have criticized Medicaid as an inefficient government program; the Obama administration has signaled it could hamstring the renewal of uncompensated care funds if Texas doesn't expand coverage. 

On July 1, another Abbott aide wrote in an email that the governor hoped to meet with Sylvia Burwell, the Obama administration’s health and human services chief, to reach a deal for Texas to keep its uncompensated care money.

“The governor wants to meet with Secretary Burwell [about] this sometime this fall or winter when she’s in town… to see if we can work out a deal on UC [uncompensated care] funds,” wrote Arthur D’Andrea, an Abbott adviser, to Kay Ghahremani, the state's Medicaid director.

D’Andrea had previously asked Ghahremani if she could talk about the details of Florida’s recent arrangement with the Obama administration to renew some of its safety net funding through a similar waiver.

Advocates for the uninsured have warned that Florida’s recent attempts to renew its low-income pool — similar to Texas' uncompensated care pool — could foreshadow trouble for Texas. In Florida, the Obama administration agreed to extend the hospital funding by two years but at a significantly reduced rate — diminished by about 50 percent for the first year and 70 percent for the second.

The federal government wrote Florida to say the low-income pool “should not pay for costs that would be covered in a Medicaid expansion,” according to news reports.

Florida’s governor sued the Obama administration, alleging it was illegally trying to force the state’s hand to expand Medicaid. Abbott publicly announced his support of that lawsuit, which Florida later withdrew.

In the July 1 email, D’Andrea told Ghahremani he wanted to collect Texas’ “best pitches for getting a deal similar to or better than Florida’s,” and to come up with “a litigation position to which I hope we will not have to resort.”

Since then, emails and other official documents show the governor’s office has been in close contact with the Health and Human Services Commission about the federal Medicaid funding. 

On July 15, Crawford, Abbott's policy adviser, asked to have “an off-line conversation” with Traylor, the health commissioner, about the federal funding. She attached some talking points about the importance of the Medicaid waiver.

“Without supplemental payments, some private hospitals may eventually be forced to make the business decision to stop serving poor people,” she wrote. “This means the ‘safety net’ falls apart because there are not enough public hospitals in Texas to serve everyone.”