Texas and Medicaid

All developed nations have universal health care coverage, and consider universal access to affordable care a moral obligation and part of social justice. The one exception is the United States. Most Americans believe that our health care is the best in the world, a statement repeated so often that it is now held as a gospel truth. This belief has been refuted in repeated studies, including two recent ones that ranked health care in the United States last or near to last by multiple objective measures, when compared to the health care in other developed nations.

The Affordable Care Act (ACA), also known as Obamacare, continues to elicit strong emotions and reactions based on ideological differences rather than a proper understanding of its benefits. The ACA offers several benefits, detailed in previous publications, that move the needle toward broader and better health care coverage for U.S. citizens. As with all such large-scale endeavors (e.g., Social Security and Medicare), the implementation of the ACA has encountered multiple roadblocks, and its initial rollout was a huge disappointment. It is now improving, but uncertainties remain as to whether, as implemented, it will increase or reduce insurance premiums, and improve or worsen the efficiency of health care delivery.

While affirming the constitutionality of the ACA, the Supreme Court ruling allowed states to accept or reject the expansion of Medicaid under the ACA, making the law’s implementation more difficult. Medicaid provides health care for the poor and uninsured. Under Medicaid expansion, the U.S. government would provide health care support equivalent to about $1 trillion (over 8 years — from 2013 to 2022) to states that accept the expansion. The federal government would provide about $952 billion of the cost; all states provide about $76 billion. The federal government will support the Medicaid expansion at a 100 percent level until 2017, then decrease support slightly, and support it at a 90 percent level indefinitely after 2022. This is a generous offer: For every $1 the state spends on health care for the poor, the U.S. government matches $9. For Texas, this effectively means that, during the first 10 years of the program (current Medicaid program plus the expansion), the federal government would increase payments to the Texas health care system by nearly $90 billion, while the share for Texas would be $15.6 billion.

There is an unfortunate and paradoxical unintended consequence of the Supreme Court ruling. In Texas, which rejected Medicaid expansion, people with annual income below the poverty line (less than $19,000 for a family of four), who were supposed to enroll in Medicaid for free, would now pay higher insurance premiums than people in the next higher income bracket (income below 400 percent of the poverty line — about $19,000-$94,000) and who are eligible for government subsidies with their insurance.

Several studies have already shown that expansion of Medicaid results in a substantial decrease in mortality, estimated at 90,000 lives annually. Twenty-three states, all with Republican governors, rejected the Medicaid expansion. This is estimated to possibly result in more than 20,000 lives lost annually. Medicaid expansion predominantly affects vulnerable citizens, including two-thirds of poor African-Americans and single mothers.

Rejecting the Medicaid expansion is based on the argument that it will increase state expenditures when, in fact, it may result in a net decrease in states’ budgets. The money provided by the federal government will cover many poor patients who currently rely on uncompensated care or state-funded services, and receive interrupted and inadequate care, often in an emergency room or a safety net hospital. This increases the cost of care, results in worse outcomes and more deaths, and adds to taxpayers’ burden. Rejecting the Medicaid expansion makes the poor even worse off, and redirects the state’s tax dollars to other states.

Another argument against Medicaid expansion is that patients on Medicaid may experience a worse outcome than patients with private insurance, Medicare or no insurance at all. Because of economic hardships, patients on Medicaid may not comply fully with their optimal medical care (due to an inability to secure out-of-pocket expenses, travel costs, time off work and child care). This explains their worse outcome compared with patients with private insurance or Medicare. However, several studies show improved outcomes and reduced mortality from Medicaid coverage compared with no insurance.

Today, Texas holds the notorious record of the highest rate of uninsured citizens. Of 26 million Texans, at least 6 million — about 28 percent of the state’s population — are uninsured. This number includes about 1.25 million uninsured children. Accepting Medicaid is estimated to add nearly $90 billion to the state’s economy, boost economic output by $270 billion, create nearly 200,000 jobs, provide additional insurance to 1.5 million people (therefore cutting the rate of uninsured people significantly), and ultimately save lives. It appears that many Republican-led states are now reconsidering the Medicaid expansion program. Given these advantages and opportunities, Texas should do the same.

Hagop M. Kantarjian, M.D., is the Baker Institute Scholar in Health Policy. He serves as a professor and chair of the Department of Leukemia at The University of Texas MD Anderson Cancer Center, where he is also the Kelcie Margaret Kana Research Chair and associate vice president for global academic programs.

Vivian Ho, Ph.D., is the James A. Baker III Institute Chair in Health Economics and a professor in the department of medicine at Baylor College of Medicine. She is also a professor in the Department of Economics at Rice University. Ho’s research examines the effects of economic incentives and regulations on the quality and costs of health care.

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