Texas Improves Health Care, Without Expanding Medicaid

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As late as mid-April, Texas seemed poised to expand Medicaid—an Affordable Care Act bait-and-switch that other Republican-led states have fallen for in recent months.

The online news site The Texan even reported, “Nine Texas House Republicans have signed onto House Bill (HB) 3871, authored by Rep. Julie Johnson (D-Carrollton), that would expand the federal welfare program.”

Yet by the end of the legislative session, just a few weeks later, the Texas Public Policy Foundation’s As I told a reporter in May, “The new reality is that Medicaid expansion isn’t just dead for now, it should be dead-dead. There’s no longer any rational justification for expanding Medicaid to help the uninsured.”

There’s no justification for expanding Medicaid because the Texas Legislature enacted other measures that will go much further in ensuring that Texans can get the health coverage—and more importantly, the care—that they need.

How this was achieved is something of a master class in taking back the narrative.

It began by flipping the script. The focus was shifted from payouts (from the federal government) to patients. For too long, Medicaid has been the go-to prescription for a nagging diagnosis—too many uninsured Americans. But a closer look at just who is uninsured in Texas—and why—shows that Medicaid expansion isn’t the answer.

According to the Kaiser Family Foundation, 57% of the uninsured in 2018 were eligible for financial assistance through Medicaid or marketplace subsidies. In Texas, 662,000 could have signed up for Medicaid (or another public insurance, such as Medicare). And some 2.17 million Texans qualify for some level of subsidy. But they chose not to participate.

Why?

A plurality (45%) say the cost of premiums is too high—something the ACA promised to address, but failed. Long waiting lists, reduced access to doctors, the lack of prescription coverage, and high out-of-pocket costs are all deterrents to enrollment in these programs. For that matter, millions of Americans who do have employer-based health insurance face these same problems.

The truth is that Medicaid expansion would only help those in the “coverage gap”—those who don’t quality for Medicaid now, but would qualify under its expansion. In Texas, that gap includes just 771,000 Texans. Remember that number.

Next, we looked to the states that had taken the bait, and found disappointing outcomes.

New York, one of the first to Medicaid expansion, has seen Medicaid enrollment explode in the last decade and faced a $15 billion budget shortfall, which could have resulted in hundreds of millions of dollars in cuts to Medicaid—had not the federal government stepped in to cover the shortfall with COVID-19 relief funds.

In California, Medicaid enrollment was up 278% over official projections, with the actual cost hitting nearly $44 billion instead of a projected $11.6 billion over a two-and-a-half year period. One out of every three people in California are now on Medicaid. The Assembly now wants to expand Medicaid coverage to undocumented immigrants age 50 and up.

And what did states have to show for this gamble? The health of their populations did not show improvement. In Oregon, researchers found that spending $545 billion in Medicaid expansion showed “no significant improvement in measured health outcomes.”

What’s more, current Medicaid recipients—the states’ neediest citizens, children and the disabled—would be crowded out by the sudden influx of a million or more new patients. A 2016 survey by the Texas Medical Association shows that less than half of Texas doctors would accept new Medicaid patients, due to low reimbursement rates and increased paperwork.

Under the weight of this evidence—which I took to every conference, luncheon and workshop I could get to—the conversation shifted. “What’s best for Texas” became “what’s best for Texans.” And that’s where Texas Democrats—and their key GOP converts on Medicaid expansion—made their mistake. They fell back on the argument that by refusing to expand it, Texas is “leaving money on the table.” We’re back to payouts, not patients—not a winning position.

That allowed Republican leadership to come back with the “Healthy Families, Healthy Texas” slate of reforms, which—they convincingly argued—would help far more Texans than simply expanding an ineffective federal program.

In just one example, the Legislature passed a bill allowing the Farm Bureau and potentially Texas Mutual to offer cheaper, more targeted plans than the ACA allows. The Farm Bureau alone already serves 750,000, and can serve as many as 1.5 million Texans—eclipsing that 771,000 “coverage gap” (mentioned above). Along with other bills, such as the expansion of telemedicine and hospital price transparency, Texas policy makers could convincingly say they did more for the health of Texans than mere Medicaid expansion could ever do.

As I told the Texas Tribune, there’s no logical reason now to expand Medicaid. And that logic isn’t confined to the Lone Star State. We can improve the delivery of health services to all Americans, and we here in Texas have shown the way.