Texas ponders a new way out of health-care reform

Liz Goodwin
November 15, 2010

Lawmakers in Texas are saying the state can't afford to participate in Medicaid, in what looks like a pre-emptive strike against a federally mandated expansion of the program under health-care reform.

Newly re-elected Gov. Rick Perry argues that the program is too expensive and that Texas could provide its own health care at lower costs.

But health-care providers told McClatchy that they're worried Texas doesn't have a plan to replace the $16.6 billion the federal government gives to the state to help them pay for Medicaid. Federal reimbursements now cover 60 percent of Texas' Medicaid costs.

"Unless our state leaders can come up with a financing plan to replace the current Medicaid structure that's even better than what we have now, I think it will ultimately end up backfiring and costing more in the long run," Dr. Susan Bailey, president of the Texas Medical Association, told the Star-Telegram.

Republican state Rep. John Zerwas says the state could apply for a federal grant that would replace the Medicaid funds while also granting the state more flexibility in administering health care. The results of a study on the state's health-care options are due in early January. Critics say if poor people are dropped from coverage, they will go to emergency rooms when they get sick instead, costing the state even more. (The Washington Post also has a good story on Oregon wanting to reconfigure its health-care system with federal waivers.)

"It's not a warning that we're going to throw momma out of the retirement home, it's just saying we've got to do something different, because this is not working for us," state Rep. Warren Chisum told the Houston Chronicle. Sixty percent of the state's nursing-home residents are on Medicaid.

The bigger story is that about a dozen budget-challenged states are floating proposals to opt out of Medicaid as a strategy to get out of health-care reform before the law's major provisions kick in. When Medicaid expands to everyone at 133 percent of the poverty line (a $29,327 income for a family of four) and lower, 16 million uninsured will get coverage. By 2019, states will have to begin chipping in for that expansion, and some are afraid they won't be able to find the cash.

Twenty states are suing the federal government over reform, saying the feds can't require them to expand the Medicaid rolls. States are responsible for helping to implement many of the new measures enacted under the health-care reform, including setting up new insurance exchanges.

National Republicans have vowed to defund health-care reform, since repeal is unlikely in the near future.

(Photo of Perry: Getty Images)