Texas Gets 15-Month Medicaid Reprieve, But Healthcare Crunch Looms

Early last week, the state of Texas got a bit of good news. Despite Governor Greg Abbott's categorical refusal to take federal funds to expand Medicaid in the state of Texas — leaving thousands of Texans without the coverage to which they were supposed to be entitled after the passage of the Affordable Care Act — the Texas Department of Health and Human services reached an agreement with the U.S. Centers for Medicare and Medicaid Services (CMS) to extend a waiver that allows Texas to receive about $4 billion in extra Medicaid funding that it wouldn't receive otherwise.

The waiver, effective in September, extends Texas funding at current levels for 15 months. During that time, the state is expected to negotiate a way forward — one that presumably won't include Abbott agreeing the Medicaid expansion. However it happens, any extension beyond the current one will hit Texas' budget hard and poor Texans even harder.

The $4 billion in funding the state currently receives goes to providing care for about 4 million Texans each year who cannot pay at private hospitals throughout the state and toward patient care reform efforts throughout the state. It also makes up 13 percent of the total income for private hospitals throughout the state. Without it, Texas Health and Human Services Executive Commissioner Chris Traylor admitted in April, many Texas hospitals would be faced with closure.

The money Texas receives from CMS is not intended to take care of patients who would be covered were the state to expand Medicaid, but that's exactly what about half of the money does. As such, Anne Dunkleberg, the associate director of the Center for Public Policy Priorities says, Texas will likely face a heavy reduction in funding once it's 15-month grace period is over. Florida recently faced a similar deadline. When the state, which has also failed to expand Medicaid under the leadership of Tea Party stalwart Governor Rick Scott, went back for another extension in 2015, CMS granted it, but only after the state agreed to drastic cuts in funding. If the same things happens in Texas, it could be catastrophic for the state, Dunkleberg says.

"If we were to lose 50 percent [of the federal money that currently goes to paying for uninsured care], we would be losing about a billion dollars annually," she says.

In North Texas, a 50 percent cut would cost area hospitals $171 million a year, according to Dunkleberg. A 70 percent cut — similar to the one Florida will face in the second year of its new agreement with CMS — could cost the region $240 million. That could have staggering effects on DFW's hospitals. The thing is, as Dunkleberg emphasizes, it doesn't have be that way.

All the state has to do to ensure continued and improved care for Texas most vulnerable residents is agree to expand Medicaid as provided for under the Affordable Care Act. If it did, the state would rake in an $6 billion a year in federal money to cover the expansion. In 2020, when the ACA would require that states begin paying for a portion of the expansion, the federal government would still pay 90 percent.

That's not going to happen as long as Abbott is in charge. The governor has repeatedly said that Medicaid expansion is wrong for Texas and has given no hint that he's even thought about changing his mind.