Texas cuts off its nose to spite its face on Medicaid expansion

I think everyone believes that Texas Governor Rick Perry is sincere in his opposition to the Affordable Care Act (ACA aka ObamaCare). But this still doesn’t explain why he’s refusing the expansion of Medicaid that the law brings.  From The Hill’s Healthwatch blog:

Texas Gov. Rick Perry (R) doubled down Monday in his opposition to expanding Medicaid under President Obama’s healthcare law, even though opposing it could cost his state $90 billion.

At a press conference where he was flanked by other conservatives, Perry argued expanding the health insurance program for the poor would make Texas “hostage” to the federal government.

“It would benefit no one in our state to see their taxes skyrocket and our economy crushed as our budget crumbled under the weight of oppressive Medicaid costs,” Perry said at the state capitol.

The last paragraph in particular is a head scratcher. The federal government will be paying 100% of the cost of the expansion over the first few years of the program and then downshifting slightly to around 90%. This is a much better deal for the states than the base Medicaid program, which Texas continues to participate in. Perry’s argument seems to be premised on the idea that the feds won’t live up to their promises  –in particular that the 90% federal share in the out years somehow won’t come true or that even if it does the extra 10% will play havoc with taxes and the Texas economy. Even if we give Perry the benefit of the doubt on this point, why not take the 100% for now and then throw all the extra beneficiaries off the rolls later? The idea that accepting the Medicaid expansion will be crushing financially is laughable.

In addition to Texas losing out on the $90 billion or so of federal funds mentioned in the article, Texas employers may face federal “shared responsibility payments” in the range of $300 to $450 million per year as a result of Perry’s obstinance. According to Jackson Hewitt Tax Service, employers are generally not penalized if their employees are on Medicaid. But if Texas rejects the Medicaid expansion, some employees who would have qualified for Medicaid will end up enrolling in the premium assistance tax credits provided by the ACA instead. And in that case their employers will be subject to substantial penalties.

Those shared responsibility payments will flow from Texas to the federal government, and the federal government will also spend billions less on Medicaid expansion in Texas. That’s good news for taxpayers in states that are accepting the Medicaid expansion, but I don’t see how it helps the people of Texas, whom Governor Perry is supposed to represent.

MCOL has a good infographic showing the impact of this provision on various states, including Texas.

You’ve heard the expression “Don’t Mess with Texas” –which originated as an anti-littering campaign– but in this case Texas it messing with itself.

By David E. Williams of the Health Business Group.

April 3, 2013

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