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New Report Details the Incredible Stupidity of Texas' Rejection of Medicaid Expansion

In July, Governor Rick Perry sent a letter to Health and Human Services Secretary Kathleen Sebelius explaining why the state of Texas would not be taking part in the federal government's plans to expand Medicaid.

Such an expansion would "enlarge a broken system that is already financially unsustainable" and "threaten even Texas with financial ruin," he wrote. Later, frustrated at the limits of declarative sentences, he turned to metaphor. Expanding Medicaid, he said, would be like adding a thousand people to the Titanic.

It was a curious argument, given the circumstances. Six million Texans lack health coverage, earning the state the distinction of having the most uninsured residents in the country. Both data and common sense predict that expanding access to health care would reduce, not increase, mortality.

As for the "financial ruin" part, it would cost the state $15 billion over a decade to offer coverage to more than a million low-income adults (those making less than $15,401 for an individual, $31,809 for a family of four). The rest of the money -- more than $100 billion -- would come from the federal government in what amounts to around a 1,000-percent return on investment.

A new report sponsored by Texas Impact and Methodist Healthcare Ministries of South Texas and authored Billy Hamilton, a former deputy comptroller and chief revenue estimator for the state, shows just how astoundingly dumb it would be for Texas to reject the Medicaid expansion.

Hamilton concludes that rejecting the federal money would result in 8,400 premature deaths each year and mean that more than a million poor adults and children would still lack health coverage, but Hamilton's argument isn't a bleeding-heart humanitarian plea. He's a money guy, so he focuses on the bottom line, the dollars and cents.

For starters, the state is already on pace to spend at least $15 billion over the next decade on things like indigent care, women's health initiatives and hospital treatment for prisoners. Much of that money could easily be counted toward the state's required match.

A large-scale Medicaid expansion would also streamline the state's scattered low-income health programs, reduce the current $1.8 billion in annual charity care and otherwise save money. And the simple injection of such a large amount of federal dollars would act as a miniature stimulus package, boosting the economic output by $67.9 billion, increasing state tax revenue by $1.8 billion, and creating 231,000 additional jobs by 2016.

The report also feels the need to politely but firmly address a charge that has frequently been leveled at Obamacare, in the process giving a remedial course in political economy.

"Criticism that expanding Medicaid would be expanding 'socialism' is incorrect," Hamilton writes in the report's executive summary. "In a socialist system, the government not only funds but also operates hospitals, hires health care providers and controls every aspect of health care. Medicaid does not do these things; patients and their health care providers make health care decisions. The state accepts federal funds for many other similarly funded programs."

The bottom line? "If politics are set aside, the right decision is obvious," Hamilton told the Texas Tribune.

For now, Perry is sticking to his guns and insisting that uninsured Texans already have access to health care through a federal law requiring hospitals to treat them regardless of ability to pay. But elsewhere, there are signs that legislators might be willing to deal with the federal government to make at least a partial expansion happen. It's either that or leave more than $100 billion on the table.


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