Passing on Medicaid Expansion is Costly for Texans


With today’s political climate, I am certain that we are all aware of the partisan politics which derive from the words “Affordable Care Act (ACA)”, also widely known as “Obama Care”. Opinions have been debated both for and against the law since its passing in 2010 and will undoubtedly carry on into the future. The major application with the ACA is to reduce the number of uninsured through Health Insurance Marketplaces and by expanding Medicaid for nearly all low-income Americans with incomes up to 138 percent of poverty ($16,242 per year for an individual in 2015.) But, The Supreme Court ruled in 2012 that each individual state has the option to opt out of the federally aided expansion. The states that adapt expansion, the federal government will pay 100 percent of Medicaid costs of those newly eligible from 2014 to 2016. The federal share gradually phases down to 90 percent in 2020 and remain at that level (kff.org). Today, there are 20 states that have not expanded Medicaid.

The argument for expansion is that all states need to accept expansion in order for the law to function at its best. The counter-argument for expansion is that Medicaid is a failed system that will not be helped by adding more people. In other words it would cost more money and not be as effective. In 2013, Gov. Rick Perry (R-TX) stated his opposition, saying, “Texas will not be held hostage by the Obama administration’s attempt to force us into this fool’s errand of adding more than a million Texans into this broken system”(cnbc.com).

No matter what side of the isle you are on, everyone can concede that healthcare is becoming more and more expensive and will only continue to rise in the years to come. In Texas, costs have been rising steadily since 2002 .

Opponents to expansion argue that Medicaid currently provides the worst healthcare value to taxpayers. Providers have been choosing to abandon the program due to low reimbursement rates as well as having to work with an arduous bureaucracy. Approximately 70% of Texas physicians refuse to accept any new Medicaid patients besides ones currently under their care. By adding 1.5 million people with expansion, they argue that uncompensated care will increase, not decrease due to enrollees realizing that the only reliable healthcare they can get is at an emergency room (texaspolicy.com).

By not expanding, Texas is leaving billions of Federal dollars on the table, not to mention the fact that Texan tax dollars are going to subsidize the states that did opt for expansion. The question becomes, do we allow partisan wrangling to override the welfare and wellbeing of Texan citizens? If we remove politics from the equation and focus on the fiscal side of things, I believe we can come out the other side with a clearer picture on why this is a prudent, financially shrewd decision to expand. Here is how much Texas stands to lose by the year 2020.

Let’s look at the numbers, as of 2014, Texas leads the nation in the amount of percentage uninsured at 19.1. Florida, which is the second biggest state other than Texas to opt out had a percentage uninsured of 23.8.

On the other hand, California and New York, two of the biggest states that did expand have their percentage uninsured at 17.3 and 12.3 respectively. In both those states, we have their citizens benefiting from federal tax dollars. The same federal tax dollars that hard working Texans contribute to and yet do not have the same benefit afforded to them. Here is a look and comparison between TX and FL on how many more people can be insured under the expansion. They each could add over a million uninsured, saving millions of dollars in uncompensated care.

The two biggest non-expanding states, Texas and Florida:

Texans not only are paying for NY and CA citizens whom receive care under the expansion, they are also footing the bill for their own citizens who are uninsured and receive care. Wade Goodman, in an NPR report, stated that 5.5 billion dollars in annual cost is saddled on Texas hospitals for uncompensated care. Those uncompensated costs are in turn being covered by higher sales and property taxes along with higher insurance premiums paid by the stats businesses and residents (npr.org).
Proponents to expansion argue that the potential amount saved on uncompensated care through expansion alone has its merits.

But, coupled with the impact that it can have in the Texas economy, can be a tremendously beneficial force multiplier for all Texan’s quality of life.

For economic reasons, many of Texas’s business leaders are in favor of expansion. In that same NPR report, Bill Hammond, CEO of the Texas Association of Business said “It’s our money that we’re sending to Washington, D.C., and we aren’t getting it back. We pay for it with corporate income taxes, we pay for it with our personal income tax and we pay for it in the fact that our premiums are higher than they would be if everyone was insured.” Ray Perryman, a Texas economist who authored a comprehensive study about Medicaid expansion in 2013, discovered that for every dollar the state would pay into Medicaid expansion, it would earn back $1.30 from the economic activity created. That economic activity is estimated to top out at $3 billion over a 10-year period, creating 300,000 jobs each year (perrymangroup.com).

Whether you are Republican or Democrat, Liberal or Conservative, at this point it’s hard to argue the numbers. Medicaid expansion, applied or not, will have rising costs years to come. The time to act is now. In 2013, an attempt to find a bipartisan answer called the “Texas Solution” died in committee from the lack of Republican support but it did provide a prospect of hope for future cooperation. It will be needed to solve the impending financial impact on Texan citizens.

1. http://kff.org/medicaid/issue-brief/medicaid-expansion-health-coverage-and-spending-an-update-for-the-21-states-that-have-not-expanded-eligibility/

2 http://www.texaspolicy.com/blog/detail/texas-should-not-expand-medicaid

3. http://www.npr.org/2015/05/29/410470081/texas-didn-t-expand-medicaid-advocates-say-money-is-being-left-on-the-table?utm_medium=RSS&utm_campaign=healthcare

4. https://www.perrymangroup.com/wp-content/uploads/Medicaid_Local_Study.pdf