Don’t Give Up On Medicaid

State Senator Rodney Ellis and I co-authored the following column:

Some Texas elected officials recently suggested that our state should consider dropping out of the federal-state Medicaid partnership. Opting out of Medicaid does not make economic sense or for good public policy.

With the state facing an estimated $18 billion to $24 billion budget shortfall, the state should rightfully seek cost-saving measures and revenue generating initiatives.

What Texas should not do is shoot itself in the foot by opting out of Medicaid. That would mean losing more than $20 billion in Texas taxpayers’ federal tax dollars every year, so that other states can spend them. Medicaid is the No. 1 source of federal funds in every state budget — Texas is no exception.

Texas already has the unfortunate distinction of having the highest uninsured population in the country. It is estimated that providing care to the uninsured costs the insured family $1,500 dollars annually in increased premiums.

Massive-scale projects, like abolishing the Medicaid program, usually require a well developed plan that includes stakeholder input, pilot projects, staggered implementation and a funding source. If Texas has a viable state plan to cover its 3.1 million Medicaid beneficiaries, it has yet to be seen. In late 2007, Texas proposed a Medicaid waiver to then-President George W. Bush. The waiver was not approved by the Bush administration because its benefits were lacking and annual limits were too low. Three years later, that waiver is still pending.

If history is any indication of our states’ ill-laid plans with good intentions: the budget crisis of 2003 would be a prime example. Texas decided to balance the budget by scaling back benefits and eligibility in the Children’s Health Insurance Program (CHIP) and Medicaid. Hundreds of thousands of children lost state-sponsored health insurance, which has taken seven years to return to its 2002 levels.

Meanwhile, in a bid to save money, the state also embarked on a privatization of it benefits system, which was projected to save $389 million dollars. The project was a disaster; riddled with technical issues, insufficiently trained contractor staff, delays in application processing, and improper benefit denials. Before 2003, the Texas food stamp program won awards from the federal government for its efficiency, but afterward our program lost bonuses and faced penalties because of the failed initiative.

Beyond the lack of a viable plan for dropping Medicaid, there are no funding sources available to replace the loss $20 billion annually in federal matching funds which Texas gains because 60 percent of our Medicaid program is paid for with federal dollars. The Texas economy would then suffer the loss of $60 billion in economic activity. Prominent Texas economists have estimated that for every one extra federal matching Medicaid dollar spent $3.25 worth of local economic activity is generated.

If lack of a plan and funding are not reason enough to throw out that deficit solution, opting out of Medicaid has the potential to affect a large percent of our state’s population. Medicaid pays for care for seven out of 10 nursing home residents, and for virtually all Texans with disabilities who get care in residential settings, 55 percent of all births in Texas, and for the health insurance for more than 2.3 million Texas children. By reducing or eliminating Medicaid these individuals would be forced to seek care in local hospital emergency rooms, which are already struggling to cover the cost of the uninsured as are Texas taxpayers.

Without additional funds to cover the cost of the uninsured, local taxpayers would inevitably pay for their care through higher property taxes, as public hospitals are forced to take up the slack to pay for their increased costs for the uninsured, and without the benefit of federal tax dollars. Health care providers would then be forced to shift even more of their costs to the privately insured market which would, in turn, drive up insurance premiums for Texans.

Health care is a valuable investment for our state and one that is essential to ensuring a quality work force and a vital economy. Opting out of Medicaid would only hurt our state economy and devastate our vulnerable populations.

Hobby served as lieutenant governor from 1973 to 1991. Ellis, D-Houston, represents state Senate District 13.

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