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Texas Healthcare, Affordable Care Act, and Medicaid Introduction

The health of our children and loved ones is sacred and shouldnt be subject to the whims of politicians
and insurance bureaucrats. Nobody should be shoved off their insurance because they develop a
catastrophic illness like cancer, nobody should be denied coverage because of their previous illness, and
nobody should be subject to the terrible abuses of the insurance industry. All Texans should have access
to quality, affordable healthcare and the peace of mind that their insurance plan will work as planned
when we need it.
Texas continues to lead the nation with the largest percent of the population that is uninsured,i and it
also has the 48th lowest percent of low income adult population covered by Medicaid of 50 states.ii
If Texas continues to fail to accept federal dollars for Medicaid expansion, then Texans will be paying for
a program that they do not benefit from. Our tax dollars are being held hostage because of partisan
politics that is not in the best interest of Texans.
To date, 10 Republican states have joined 20 other states and the District of Columbia to expand
Medicaid. Six of those states were able to work with the federal government to craft expansion plans
that were specific to their state, and the federal government has been vocal about its desire to work with
Texas. Texas should follow the advice of organizations like the Texas Association of Business, Republican
county and local officeholders, and bipartisan legislators to craft a Texas specific solution to Medicaid to
ensure our Texas veterans, children, elderly citizens and working families receive the health care they
deserve.
Even without Medicaid expansion, we are currently paying for more expensive care for these
populations. When individuals get sick and seek treatment at the ER, those costs of uncompensated care
get passed along to us in the form of higher insurance premiums and higher taxes.
It costs a lot more to go to the ER than to go to a primary care physician.
Accepting the Medicaid dollars would allow us to provide more affordable care and better treatment to
low income Texas citizens. Especially since an individual cant get chemotherapy or other treatments for
chronic illnesses in the ER.

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Affordable Care Act


The Affordable Care Act was designed to build off of the existing health insurance infrastructure in our
country while improving the system and extending access to affordable healthcare to the millions of
uninsured. The provisions in the ACA greatly benefit Texas, which had tried and failed for years to
protect consumers and address the problems with our health insurance system. These common sense
provisions had been difficult to pass on the state level, but are key to ensuring access to affordable
coverage for Texans. They include prohibiting discrimination based on pre-existing conditions, ending
the practice of dropping policyholders when they become seriously ill, ending lifetime caps on coverage,
reducing out-of-pocket expenses, ensuring access to preventive care and expanding Medicaid coverage
to all people living in poverty.
Prior to the implementation of the ACA, in addition to the uninsured, there were millions of
underinsured Texans. Each day, 470 Texans lost their coverage because of rising premiums, being
diagnosed with a catastrophic illness, and obscene out-of-pocket expenses. The ACA capped consumer
spending ensuring that no one has to fear bankruptcy to pay for care.
In 2008 6.9 million Texans spent more than 10 percent of their income on health-related costs. In 2007,
62 percent of personal bankruptcy filings were caused by medical problems. The large majority of those
filers - 78 percent - had health insurance when their illness started. Often it takes a catastrophic illness
or event -- like getting diagnosed with cancer -- for a family to realize the problems that were inherent in
our insurance system. Surveys show that 25 percent of individuals with cancer report using all or most of
their savings as a result of the financial burden of treating it. Treatment is so costly that many patients
wait, resulting in devastating effects on their health. In Texas, 10 percent of people have diabetes and
28 percent have high blood pressure. Insurance companies used the presence of these illnesses, and
others like cancer and mental illness, to charge higher premiums and deny coverage.
Many individuals with insurance face the same problems as those who lack coverage altogether. More
than half of underinsured individuals delay medical care because of costs, and 45 percent of the
underinsured have difficulty paying medical bills.
Under the ACA, most Texans will continue to receive health insurance coverage through their employer.
For those that purchase their health insurance on the private market, plans are now required to have
standard minimum benefits, they cant charge more based on health status, there are limits on premium
increases as people age, there is no denial of coverage, no pre-existing conditions discriminations and no
annual or lifetime maximums.
States were given the option to create online exchanges, or marketplaces, where individuals can shop
for and compare private health insurance plans that meet certain minimum coverage requirements.
Those individuals under 400 percent Federal Poverty Level ($92,200 for family of 4) that purchase health
insurance on the exchanges receive sliding scale deductibles and copays and out-of-pocket caps in the
exchange to increase affordability and reduce medical bankruptcy.
Republicans and Democrats in the state legislature proposed plans to create a Texas based exchange,
but Governor Perry refused to move forward with the plans. As a result, Texans must turn to the
federally operated exchange, healthcare.gov, to seek and purchase care.
The ACA originally contained a provision to expand Medicaid to those individuals living below 133
percent FPL. This requirement for states to expand the program was struck down by the Supreme Court,
leaving states with the ability to opt out of the expansion. Texas is one of the states that has thus far
chosen to opt out of Medicaid expansion, depriving affordable health insurance to over 1 million
working Texans and passing the costs for uncompensated care on to local taxpayers and individuals with
insurance while sending the dollars earmarked for Texas to other states.
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Medicaid Expansion in Texas


Texas has the ability to lead the country through innovative reforms that will strengthen the health
insurance plans of Texans with insurance, lower costs, extend coverage to working Texans without
insurance and improve the health, wellbeing and financial security of all citizens.
Republican legislators point to the growth in costs associated with the Medicaid program as reason to
reject additional federal dollars for the expansion of Medicaid to cover low income, working Texans.
However, data demonstrates that states that expanded Medicaid and accepted the federal dollars had
lower spending growth in Medicaid that in states that did not expand, like Texas.iii

Medicaid expansion can provide coverage to those working Texans that fall between the cracks and are
denied or cant afford private coverage. It would keep those working Texans out of the emergency room
where they often cant afford to pay their bills and would stop those costs from being passed on to
Texans through higher insurance premiums and property taxes. Expansion will keep the federal tax
dollars of Texans in Texans instead of going to other states and it will create jobs and spur economic
development in our communities. Finally, bipartisan proposals in the Texas House and Senate have
demonstrated that compromise plans can be revenue neutral, requiring no additional general revenue
to implement while achieving significant cost savings to state and local governments, hospitals and
private health insurance plans.
The goal of Medicaid expansion should be to lower costs and strengthen and secure the existing
coverage of Texans with health insurance and provide quality coverage to the more than 1 million
estimated Texans that would qualify for Medicaid expansion under the Affordable Care Act. Further, any
such plan should minimize the use of state dollars, bend the cost curve for larger healthcare costs, reign
in abuses, implement best practices and secure and strengthen the existing plans of Texans with health
insurance. Since Texans have to make federal tax payments, they're still helping finance expansion in
other states, they're just not seeing any benefit at home.
Industry experts have predicted that states that do not expand Medicaid may see higher premiums as
hospitals shift the cost of uncompensated care to insurers.iv This issue is particularly acute in Texas,
where Texas hospitals currently spend more than $5 billion in a single year for uncompensated care,
nearly all of which is supported by local property tax dollars.v
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By choosing not to participate, Texas will forgo an estimated $9.58 billion in federal funding in 2022.
Taking into account federal taxes paid by Texas residents, the net cost to taxpayers in the state in 2022
will be more than $9.2 billion.vi
The federal government has demonstrated that it is willing to work with individual states to craft
compromises to Medicaid expansion. The first state to receive permission to build a locally tailored
program was Arkansas, which used Medicaid expansion dollars to help eligible Arkansans purchase
private health insurance plans, instead of enrolling in the states Medicaid program.
After the Arkansas model was approved, many states including Texas began looking at ways to tailor
their approach to Medicaid expansion to better fit their specific policy and political needsvii. In 2013,
Republicans and Democrats in the state legislature crafted a Texas Solution to Medicaid expansion
that built off the new alternative state approaches being pursued by other states. Once again, Governor
Perry defeated the proposals.
However, other states are moving forward with plans to build compromise Medicaid expansion plans.
From the Commonwealth Fund:viii
To fill the coverage gap and capture some of the lost revenue, some states that were initially hesitant
to expand Medicaid are now pursuing alternative approaches to cover more low-income residents. (See
interactive map). In order to receive federal matching funds, states must propose a pathway to coverage
for all adults in the newly eligible Medicaid group under the law (i.e., adults with incomes up to 138
percent of poverty). Arkansas, Iowa, and Michigan submitted so-called Section 1115 waivers to the
Centers for Medicare and Medicaid Services (CMS) and have received approval to customize their
expansions; Pennsylvania has applied for a similar waiver. Utah and New Hampshire are considering
different options. The legislatures and governors in these states, which have wanted to make health
insurance available to their poorest residents but have not been able to agree on an approach, have
turned to the use of private insurance and greater cost-sharing as compromises.

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The Medicaid expansion compromise proposed by Republicans and Democrats in Texas included
premium assistance for the purchase of private plans, cost sharing, health and wellness incentives and
other proposals that have traditionally been supported by conservative lawmakers. However, instead of
proposing these reforms to weaken coverage in existing Medicaid populations, the proposals are used
to extend coverage to the uninsured expansion population. Based on LBB estimates, these Medicaid
proposals should be cost neutral and require no additional general revenue to implement while
achieving significant cost savings to state and local governments, hospitals and private health insurance
plans.
Background Facts and Figures on Medicaid Expansion
HHSC estimates that with full Medicaid expansion the rate of uninsured In Texas would drop from 24%
to 12%.
Texas stands to lose more federal funds than any other state despite contributing the second highest
amount in federal income tax to the US general revenue fund.
According to an economic analysis by the Perryman Group, Texas would see a return of $1.29 for every
$1 spent on Medicaid expansion, and the burden on local governments would be reduced by $1.21 for
every dollar the state spent on expanding the program. According to conservative estimates conducted
by Billy Hamilton, the full amount of savings from expanding Medicaid and drawing down this enhanced
match could be almost $1.2 billion in general revenue.
Medicaid expansion will reduce Texas hospitals bills for uncompensated care. Currently, hospitals
absorb more than $5 billion annually in uncompensated care, a loss that is passed on in the form of
higher prices, as well as direct tax areas that have hospital districts. Medicaid expansion will cost us less
in four years than what Texas hospitals spend on the uninsured populations in one year.
Perryman further estimates that Medicaid expansion would generate over 300,000 Texas jobs per year
on average over 10 years, even netting out the impact diverting the state's required matching
contribution.
Billy Hamilton Consulting projects economic activity from Medicaid expansion would generate an
estimated 231,000 jobs by 2016, and several times that number in later years.
Texas currently has the highest uninsured rate in the nation, with more than 1 in 4 lacking coverage, or
over 6 million people. A Gallup poll reports that Texas has the highest percentage of people ever
recorded without health insurance at 28.8 percent. Medicaid expansion will provide health insurance to
approximately 1.5 million uninsured Texans.
The Legislative Budget Board estimated that a Medicaid expansion in Texas that follows current
guidelines would cost $50.4 million in GR for this biennium and draw down $4 billion in federal matching
funds. The state's share is half of the administrative cost for the first two years. The compromise
Medicaid expansion plan proposed by lawmakers in 2013 includes mechanisms that should further
reduce the cost to the state to the point of cost neutrality.
Since expansion would not be implemented until 2015 or 2016, Texas will receive a 100 percent match
from the federal government to pay for the first and/or second year and the match will be gradually
reduced to 90 percent of funding thereafter.

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Conclusion
Texas has the ability to lead the nation and create state based solutions to the health insurance
problems facing our state. We can build off bipartisan proposals to create an alternative, cost neutral
program for low-income individuals in the coverage gap. Instead, our leaders have failed to act and left
millions of Texans either uninsured or underinsured. These actions have led to higher taxes and higher
insurance premiums to pay for the cost of uncompensated care in our state. Texas should follow the
example set by Republicans and Democrats in the Legislature to craft a state based solution to Medicaid
expansion, improve the existing Medicaid system by encouraging innovation, streamlining
administrative hassles, incentivizing best practices and cracking down on Medicaid fraud while holding
state contractors accountable for taxpayer dollars

The Henry J. Kaiser Family Foundation. State Health Facts Online: Health Insurance Coverage of the Total Population. (2013). Online. Available
at: http://kff.org/other/state-indicator/total-population/.
ii
The Henry J. Kaiser Family Foundation. State Health Facts Online: Health Insurance Coverage of Low Income Adults 19-64 (under 200% FPL).
(2013). Online. Available at: http://kff.org/other/state-indicator/low-income-adults/
iii The Henry J. Kaiser Family Foundation. Medicaid Enrollment & Spending Growth: FY 2015 & 2016. (2015). Online. Available at
http://kff.org/report-section/medicaid-enrollment-spending-growth-fy-2015-2016-issue-brief/
iv http://www.modernhealthcare.com/article/20140422/NEWS/304229963?AllowView=VDl3UXk1TzlDUGFCbkJiYkY0M3hlMGVyalVVZERPVT0=#
v http://forabettertexas.org/images/Medicaid_Overview_TMA_10_19_2012.pdf
vi
http://www.pewstates.org/projects/stateline/headlines/private-option-for-medicaid-expansion-would-cut-some-benefits-85899542701
vii
http://www.commonwealthfund.org/Blog/2014/Mar/Medicaid-Expansion-Alternative-State-Approaches.aspx?omnicid=20
viii

http://www.commonwealthfund.org/Blog/2014/Mar/Medicaid-Expansion-Alternative-StateApproaches.aspx?omnicid=20

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