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New flash: Dropping Medicaid would be bad

Don’t take my word for it, take the Texas Department of Health and Human Services’ word for it.

Opting out of federal Medicaid, something Republican leaders have been considering as a method to wipe out Texas’ estimated $25 billion budget shortfall, would create major difficulties, the report states — not just for the millions of poor and vulnerable Texans covered by Medicaid, but for the county governments and public hospitals where much of the financial burden would be shifted.

Up to 2.6 million Texans — many of them children — could become uninsured. And hospitals would still be required by federal law to treat medical emergencies, potentially adding billions of dollars in annual uncompensated care costs funded at the local level. Meanwhile, Texans would continue to pay federal taxes to support other states’ Medicaid spending, the report notes.

Texas would “lose billions each year in federal funds; billions of dollars in indigent health care costs would shift from the state and federal levels to local governments, public hospital districts, medical providers, and the privately insured; and 2.6 million Texas residents could lose health insurance,” the report states.

Still, the escalating Medicaid costs facing the state — up 170 percent in the last 11 years, and accounting for a quarter of the state budget — have far exceeded the growth in state tax revenue, inflation and population, and are unsustainable, the report notes. The HHSC report says the best solution is for the federal government to give states greater responsibility over program costs, allowing them to design their own eligibility systems and benefit packages, and making it easier for them to get waivers. They also recommend reforming the new federal health care law, as well as revising how the federal government calculates the state vs. federal contribution to Medicaid.

“Virtually every state in the nation is facing a severe budget shortfall made worse by rising costs in Medicaid,” the report states. “…Without significant reform at the federal level, states are left facing a no-win dilemma.”

Actually, the best solution, which a number of people have proposed and were pushing during the debate over the Affordable Care Act last year, is a complete federalization of Medicaid. This would be a huge relief for state budgets now and in the future and would ensure a single standard of coverage, so that you don’t have states like Texas which deliberately make it hard to qualify as a way of saving itself a few bucks. Needless to say, this ain’t gonna happen, and if President Obama proposed it you’d see Republicans in Texas and everywhere else tell him to keep his dirty hands off of this beloved program of theirs that they intend to kill if they can get away with it.

The Trib has more here, and Dave Mann notes that what this really constitutes is not an attempt to kill Medicaid, but a move to basically privatize it:

The report concludes that the federal government should allow the state to “incorporate market oriented principles and greater accountability into the Texas Medicaid program.

“Under one waiver proposal, the state would establish consumer-directed medical accounts with sufficient funding to allow a client to purchase an individual or family high-deductible private insurance policy and fund a related health savings account.

“The proposal would empower Medicaid recipients to use health saving accounts for out of pocket health care expenses, job training, child care, or other qualifying purchases.”

This would represent a fundamental shift in how Medicaid functions. In the current model, the government reimburses doctors and other providers for the health care services they offer Medicaid patients.

Under the Perry plan, the government would fork over Medicaid money directly to individuals who would then shop for and purchase a private insurance plan. Instead of one money transfer (government to health care providers), we would have three (government to patient to insurance company to providers). Perry and the report authors pitch the latter system as more efficient, despite the added bureaucracy that would no doubt come along with these added transactions.

I don’t know if it would be more efficient. But it certainly would be a boon for the insurance industry and whatever financial institution would maintain these health savings accounts.

You can read the full report here. Those of you who have been paying attention may notice that this is very similar to the Paul Ryan plan for Medicare, basically by replacing the government as the insurer with vouchers for purchasing private insurance. You then can control costs easily by simply refusing to increase the voucher amounts over time, with predictable results for their purchasing power. One way or another, it all leads to the same end. One more thing from the original story:

HHSC raised eyebrows earlier this year with its big-figure estimates for how much federal health reform was going to cost Texas. The latest agency estimate indicates health reform will cost the state quite a bit less — about $5 billion between 2014 and 2019. This estimate excludes non-mandatory rate increases that were included in the original calculation. And it includes roughly $760 million in state revenue from premium taxes expected to be paid by health plans that cover new Medicaid clients.

I guess now that it’s actually been passed, there’s less point in exaggerating about it. Funny how these things work, isn’t it? A statement from Rep. Garnet Coleman is beneath the fold.

Representative Garnet F. Coleman (D-Houston) released the following statement in response to the Impact on Texas if Medicaid is Eliminated report released by the Health and Human Services Commission:

We now have an official report that confirms some our biggest fears. It would cost Texas more money to administer its own program which would result in fewer services. If you want to save real dollars, you have to throw real people out on the street. Medicaid is a good program for the state of Texas, and opting out to create some new program would be a fool’s errand.

Governor Rick Perry’s real motive is to make other cuts to Medicaid seem more palatable. None of it is acceptable. We absolutely cannot cut reimbursement rates to Medicaid providers to the point that they are so low, that the program will be ineffective. Cutting optional programs would also devastate Texans served by Medicaid.

Governor Perry’s proposals would hurt our elderly, disabled, and low income children. I hope that the Governor stops considering these unrealistic options and starts working on actual solutions.

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3 Comments

  1. […] the Kuff takes a look at the HHSC report on the effects of dropping Medicaid. Short answer: It would be bad, but what they really have in mind to do may be even […]

  2. […] the Kuff takes a look at the HHSC report on the effects of dropping Medicaid. Short answer: It would be bad, but what they really have in mind to do may be even […]

  3. […] the Kuff takes a look at the HHSC report on the effects of dropping Medicaid. Short answer: It would be bad, but what they really have in mind to do may be even […]

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