Dropping the Texas Shoe

Texas will not expand its Medicaid program or establish a health insurance exchange as provided in the Patient Protection and Affordable Care Act AKA “ObamaCare”:

Texas will not expand Medicaid or establish a health insurance exchange, two major tenets of the federal health reform that the U.S. Supreme Court upheld last month, Gov. Rick Perry said in an early morning announcement.

“I stand proudly with the growing chorus of governors who reject the Obamacare power grab,” he said in a statement. “Neither a ‘state’ exchange nor the expansion of Medicaid under this program would result in better ‘patient protection’ or in more ‘affordable care.’ They would only make Texas a mere appendage of the federal government when it comes to health care.”

Perry’s office sent a letter to U.S. Health and Human Services Secretary Kathleen Sebelius on Monday morning asserting his opposition, both to accepting more than a hundred million federal dollars over the next several years to put more poor Texas adults onto Medicaid, and to creating an Orbitz-style online insurance marketplace for consumers.

The U.S. Supreme Court has ruled that states — even Texas, which has the country’s highest rate of the uninsured — may not be punished for opting out of the Medicaid. The insurance exchange is not optional; if Texas doesn’t devise its own, the feds will establish a one-size-fits-all program for the state.

“If anyone was in doubt, we in Texas have no intention to implement so-called state exchanges or to expand Medicaid under Obamacare,” Perry said in a statement. “I will not be party to socializing healthcare and bankrupting my state in direct contradiction to our Constitution and our founding principles of limited government.”

I think this step was a foregone conclusion after the Supreme Court’s decision.

As I’ve pointed out any number of times people without healthcare insurance are disproportionately in just five states and the state with the highest absolute number and proportion of people without healthcare insurance is Texas. Texas’s opting out is a big deal. It alters the figures on how many people will be without healthcare insurance drastically. If your actual intent is to ensure that the greatest number of Americans have healthcare insurance, you’ve got to have Texas’s cooperation.

I don’t believe that Gov. Perry’s move will prove unpopular in Texas or that it is mere political posturing. Disagree with it or not I believe it’s a matter of genuine conviction. There are actual differences of opinion on this subject and discounting that does not advance the conversation.

20 comments… add one
  • michael reynolds Link

    A typically stupid decision by a stupid governor of a backward state. Their schools are a disaster, their health is a disaster, but their oil millionaires are doing great. Today’s grandstanding will eventually yield to sotto voce acceptance, that’s the “conservative” pattern in this country.

  • sam Link

    Maybe, maybe not: The super wonky reason states may join the Medicaid expansion:

    [W]e’re treading into an obscure, acronym-laden area of Medicaid policy that does not usually get much attention, but plays a huge role in states’ deliberations over whether to join the health law’s Medicaid expansion.

    It all centers on something called DSH payments (pronounced “dish” payments, in health-wonk parlance). That stands for Disproportionate Share Payments, extra money that Medicaid sends to hospitals that provide a higher level of uncompensated care. Those payments, which totaled $11.3 billion in 2011, are meant to offset the bills of the uninsured.

    The Affordable Care Act phases out these payments. If most Americans are covered under the Affordable Care Act, after all, hospitals would presumably see a reduction in unpaid bills. They wouldn’t need the supplemental payments anymore.

    That was the thinking before the Supreme Court decision, at least. If a state opts out of the Medicaid expansion and does not extend coverage to those living below the poverty line, the math changes. The unpaid bills do not disappear, but the DSH dollars do. Barring an act of Congress, those supplemental funds will be largely phased out by 2020.

    That’s a big deal for hospitals, who already spend about $39.3 billion a year on uncompensated care, which makes up 5.8 percent of all expenses. Add on another $11 billion and hospitals would find themselves spending 27 percent more covering unpaid bills. It especially matters in states with more uninsured residents. In Texas, for example, the hospitals received $957 million in DSH payments last year.

    That money goes away, regardless of whether Texas decides to join the Medicaid expansion or not. Those dollars could be replaced with new Medicaid payments – or, if not, it will be about a $1 billion in new bills for Texas hospitals to foot.

  • Sam,

    I wonder if the SCOTUS decision on medicaid expansion will affect that at all.

  • sam Link

    “I wonder if the SCOTUS decision on medicaid expansion will affect that at all.”

    I wouldn’t think so. SCOTUS said that the feds cannot deprive a state of its currently received Medicaid funding if the state refuses the extension. But these payments are not being ended because a state refuses the extension–they’re simply being phased out. And the ending applies equally to all states, whether a state accepts the extension or no.

  • TastyBits Link

    @Michael Reynolds

    Do not despair. The US federal government is like the Borg. “Resistance is futile. You [Texas] will be assimilated.” If Medicaid expansion is not allowed, Medicaid will be replaced with a new program, and the new Not-Medicaid program will include the PPAACA requirements.

  • michael reynolds Link


    I agree, (though I doubt anyone wil have to rename medicaid,) that’s one reason why this decision is stupid. It’s posturing that just ends up hurting people in Texas so their buffoon of a governor can strut for the yahoos. If Obama wins Texas will sign on three months later under pressure from the healthcare industry.

  • PD Shaw Link

    I still think its 50/50 that Illinois unwillingly follows Texas (and without the rhetoric). It will cost Illinois $2.4 billion over the next six years to opt in. Last year Illinois had to cut $1.6 billion from Medicaid, and if costs are not controlled, it will have to rinse and repeat, kicking more people out and lowering reimbursements to providers who are also “opting out.”

  • PD Shaw Link

    Wasn’t there a provision that authorizes the feds to set up the exchanges if a state doesn’t? I’ve always assumed that the greatest incentive for these types of “new federalism” programs was in the states ability to hire its own cronies to administer them. If the states cannot afford to opt-in without laying off existing cronies, the incentive isn’t there.

  • Mercer Link

    “Wasn’t there a provision that authorizes the feds to set up the exchanges if a state doesn’t? ”


    Many pundits assert the GOP needs a softer line on immigration to get more Latino votes. Stances like Perry on Medicaid are what make immigration policy irrelevant to the GOP getting the Latino vote.

  • Brett Link

    Assuming that the bill survives the next couple of years, Texas will come crawling in to the system, eventually. It’s not like they’re the first state to be a hold-out when it comes to Medicaid – Arizona held out for years, until the burden at the local level was such that the state government accepted Medicaid funding.

  • steve Link

    This announcement is very popular in an election year. Is it sincere? I think it probably is. You dont get to lead the country with the most uninsured people by accident. This will make for a very sleazy practice environment. Glad I dont practice down there.


  • PD Shaw Link

    Again, I have to assume most commenters live in fiscally prudent states and local communities without budgetary distress, and think it must be nice, but I can’t help but wonder perhaps if not everybody on the intertubes bothers with the local papers anymore. Here is Illinois’ situation:

    “the state predicts that Medicaid appropriations will increase 2 percent per year over the next several years. Gov. Quinn, on the other hand, has made clear that appropriations will remain flat. If appropriations remain flat as Quinn predicts, the backlog will grow to more than $23 billion. And that’s without ObamaCare, which is expected to cost the state another $6 billion during the 5-year budget window.

    Medicaid patients are already suffering from the state’s low reimbursement rates and long payment delays. Nursing homes and hospitals are running out of time and money while they wait for reimbursement. Doctors are having to turn away poor patients or make them wait weeks or months longer to receive care, just to keep their doors open.”

    State taxes go up, Medicaid appropriations flat (hopefully), appropriations to schools and local government go down. My grandmother’s nursing home closes, my sister-in-law’s community mental health facility is one of those running out of time to stay open, and Latinos are worried about a path to citizenship?

  • steve Link
  • I think that McAfee is misinterpeting the data, looking at too short a time line. I think that rather than asking why unemployment is so high now we should be asking why it was so low 15 years ago.

  • Having lived in Texas I think this is probably the prudent thing to do, at least for the time being. Like it or not, Gov. Perry has to answer to the voters in Texas and they do not want to increase taxes to pay for an expanded entitlement, especially one of unknown cost. If Perry accepts this and the funds don’t come from additional tax revenue, then where will the funding come from, especially since costs will likely rise faster than revenues, necessitating even more revenues down the road? While I’m sure the Governor is philosophically opposed to the expansion, and I’m sure election year politics is playing a big part in this decision, one shouldn’t ignore the practical considerations – If the Governor knows the state can’t pay for it without cuts in other areas, then it’s probably prudent not to accept.

    As noted, Texas has a lot of uninsured, so the cost will be significant – a lot more than most other states. And those costs aren’t yet known with certainty. In Florida, for example, the estimates vary from a few hundred million dollars to almost $2 billion. The uncertainty regarding costs to the state is a pretty big deal here in Florida and I’m sure it is in Texas too.

    And the thing is, Texas could always join later. From Texas’ perspective, why not let other states be the guinea pigs to see how much it will actually cost and wait until all the inevitable kinks are worked out? Maybe if the PPACA wasn’t such a complicated and enigmatic piece of legislation things might be different. But it is what it is and it’s not surprising at all that Texas would kick the can down the road on accepting it.

  • jan Link

    No matter how many people on the left want to parse it, there is an enormous rebellion/anger over the healthcare that many feel is being imposed on them by the social progressive wing of the democratic party. You can call the narrow constitutional ruling a victory, encouraging everyone to just “move on”. But, I doubt this will happen. You can also say that now we finally have become a ‘humane’ country (Michael’s whimsical rationalization). But, legislating it and strong-arming it into the American psyche will not necessarily make it so.

    These numbers, in this article, are probably more symbolic of discontent than being realistic: 83% of doctors have considered quitting over Obamacare. However, I continue to think there will be a greater number of physicians leaving the profession than many imagine. And, as this piece suggests, having guaranteed HC for everyone means relatively little if you don’t have the means (money or people) to meet the medical needs out there. Consequently, IMO, if the ACA isn’t repealed, humane healthcare will turn into systematic rationing by a disengaged, removed bureaucratic board, which, to many families, will seem far less humane than it is today.

  • steve Link

    Q@jan- I know no docs leaving. The piece you cite is terribly flawed, written by a partisan group.


  • jan Link


    I prefaced the article by saying it’s probably more symbolic of doctor’s discontent than a realistic figure. It’s also too early to gauge how many, if any, will actually leave. However, there are groups of doctors, partisan if you will, who do not like the bill, and are not comfortable practicing medicine under it’s perimeters. There are also patients who don’t like it either.

    Basically the ACA legislation is an unpopular policy among a wide swathe of people, which is too bad, as I think with real bipartisan input and effort something much better and more substantial could have been created (including tort reform ,that you and I agree on, as well as more competition in the insurance marketplace).

  • Trumwill Link

    Aren’t liberals always giving red states grief for taking too much federal money? (Texas is a donor state, but people pretend it’s not.) Shouldn’t this be a welcome development?

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