GOP Texas Lawmakers Call for Opting State Out of Medicaid Program

After Republicans in the Texas Legislature last week suggested opting out of the federal Medicaid program, health care experts and economists have begun questioning whether doing so would be feasible, Kaiser Health News/New York Times reports.

Republicans, who have recently expanded their majority in the Texas state House, say Medicaid and CHIP are contributing to a state budget deficit that some estimate to be nearly $25 billion.

State GOP lawmakers have argued for eliminating the federal matching funds Texas receives or allowing the state to seek federal waivers to provide health insurance coverage as it wishes. Using only state money to fund Medicaid would allow the state the flexibility to determine benefits.

Supporters

Supporters of the idea note that low-income people would receive federal subsidies and be able to purchase private insurance through the exchanges that will be set up in 2014 under the federal health reform law.

States still would be responsible for Medicaid beneficiaries who require long-term care services, as well as premiums and other Medicaid costs for Medicare beneficiaries also eligible for Medicaid, according to KHN/Times.

Edmund Haislmaier, a senior research fellow at the Heritage Foundation, estimated that 40 states would save money using such a model, and Texas specifically would save $46.5 billion between 2014 and 2019.

Opponents

Opponents of the model say that only individuals with annual incomes below the federal poverty level would be eligible for subsidized health insurance through the exchanges and that such a move would be costly for the federal government.

They also say that not accepting federal Medicaid funds would devastate Texas' economy. The federal government currently covers 60% of Texas' biennial Medicaid budget, which is $45 billion.

Opponents also say that if Texas lost that funding, emergency departments would be flooded with patients, care would be less efficient and Texans likely would pay higher premiums for private health insurance. In addition, the one million Texans who work in the health care industry could have their jobs compromised.

Other States Considering Idea

According to KHN/Times, as many as 12 other states, including Alabama, Mississippi, Washington and Wyoming, have considered the idea.

Former Congressional Budget Office Director Robert Reischauer said the search for alternatives to Medicaid might be more about states' seeking more leverage to receive more federal funding.

He said, "Some states will toy with it, think about it, and reject it from the state perspective," adding, "To the extent they don't, I would hope Congress and the president work together to create very strong incentives against it" (Ramshaw/Serafini, Kaiser Health News/New York Times, 11/11).