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State’s Decision Not to Expand Medicaid Raises Consequences Beyond 15-Month Waiver Period

The financial strain of health care costs will only worsen if Texas refuses to participate.

Columns appearing on the service and this webpage represent the views of the authors, not of The University of Texas at Austin.

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The Texas Health and Human Services Commission recently negotiated with the federal government a 15-month waiver for Medicaid funding, which would produce more than $4 billion toward health care coverage for uninsured Texans. This waiver is a crucial step to achieving health care for millions of the state’s uninsured people, with 13 percent of the allocation contributing to the total income of private state hospitals.

Likewise, rural hospitals throughout the state are vulnerable to financial pressures if Texas decides not to expand Medicaid eligibility beyond the negotiated 15-month period. In fact, a 2015 study that compared rural hospitals in Medicaid expansion states with nonexpansion states in terms of uncompensated care dollar amounts and profitability found large accumulations of unrecoverable debt among rural hospitals in nonexpansion states.

This suggests these hospitals are more susceptible to financial losses if Medicaid is not expanded. Texas taxpayers have already contributed to Medicaid expansion in other states in terms of payment of federal taxes — now Texas should have its turn.

The state’s decision not to expand Medicaid raises consequences beyond the 15-month waiver period. Where will the dollars come from if uninsured people in Texas are not covered by Medicaid at the end of 2017? More to the point, why does Texas say no to $100 billion paid by the federal government over the period of 10 years to extend Medicaid?

Medicaid expansion under the Affordable Care Act is funded 100 percent by the federal government. These dollars would provide health care to the estimated 5 million uninsured Texans. This is especially an important concern because the U.S. Census Bureau reports the state has the largest number of uninsured Americans in the country.

Many Texans are facing a new reality — fully employed yet still unable to afford health insurance. Even with the government-subsidized health insurance offered under the Affordable Care Act, a large population falls into the “coverage gap.” Their salaries are too high for traditional, unexpanded Medicaid, yet they can’t afford private insurance.

It is a reasonable assumption that having health care insurance has significant effects on chronic disease identification and management. When Texans can’t afford insurance and are not eligible for ACA subsidies, their best option for health care is from hospitals, community-based providers such as clinics and health centers and office-based physicians. Without Medicaid reimbursements, the likelihood of unrecoverable debt is inevitable.

The large debt associated with uninsured care increases the tax demands on individual taxpayers and corporations. Uncompensated debt has to be paid, but because Texas has refused Medicaid funds beyond the 15-month extension period, the state’s businesses and its residents absorb these costs in the form of property taxes and higher insurance premiums.

The statistics are not new. Texas ranks third in the nation for the highest property taxes and second for the highest paid insurance premiums. The reality is the money from the 15-month Medicaid waiver is the taxes the corporate sector and Texans have paid to the federal government in the form of federal taxes. Texas residents will not benefit from the payment of federal taxes, coupled with payment toward unrecoverable debt.

The financial strain of health care costs will only worsen if Texas refuses to participate. Our elected lawmakers need to take this into account.

Perhaps they should look to our neighbors to the north. Oklahoma’s governor and state legislators are currently considering Medicaid expansion to prevent cutting doctor reimbursements by 25 percent, in order to address the rising costs of health care in that state.

After 2020, the federal government will cover 90 percent of the Medicaid allocation, and the remaining 10 percent will have to be covered by the states. In Oklahoma, a $1.50-per-pack tax on cigarettes is being proposed to cover the 10 percent. At what cost will Texas refuse $6 billion annually until 2020 to extend Medicaid? The economic and social costs of this decision are dire.

Michele A. Rountree is an associate professor of social work and a research fellow with the Institute for Urban Policy and Research Analysis at The University of Texas at Austin. Tonia Wu is a public health and pre-med student in the College of Natural Sciences at The University of Texas at Austin.

A version of this op-ed appeared in the Waco Tribune Hearld, Rio Grande Guardian, McAllen Monitor, Tribune Wire Service and the Dallas Morning News.

To view more op-eds from Texas Perspectives, click here.

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Texas Perspectives is a wire-style service produced by The University of Texas at Austin that is intended to provide media outlets with meaningful and thoughtful opinion columns (op-eds) on a variety of topics and current events. Authors are faculty members and staffers at UT Austin who work with University Communications to craft columns that adhere to journalistic best practices and Associated Press style guidelines. The University of Texas at Austin offers these opinion articles for publication at no charge. Columns appearing on the service and this webpage represent the views of the authors, not of The University of Texas at Austin.

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