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Research & Commentary: Texas Should Continue to Resist Medicaid Expansion

September 3, 2021

In this Research & Commentary, Christina Herrin examines the impacts Medicaid expansion would have on the state of Texas.

stethoscope and insurance docs

Texas is one of 12 states that has foregone Medicaid expansion. The Affordable Care Act (ACA) allows states to expand the Medicaid coverage threshold to 138 percent of the federal poverty level, or $3,000 per month for a family of four. Correspondingly, the American Rescue Plan (ARP) offered financial incentives for states to expand Medicaid.

Medicaid is a costly program that allows state legislators to boost budgets and provide coverage for those patients who cannot acquire coverage via the free market due to economic considerations. Such a solution can initially be beneficial, but using federal dollars to subsidize health care problems at the state level is a temporary solution. Over the long term, taxpayers are left on the hook for the cost of this big budget increase.

Still, Texas Democrats are pushing for further dependence on the federal government. Rep. John Bucy (D-TX) introduced HB 234, which aims to “expand medical assistance to all persons who apply for that assistance and for whom federal funds are available.” This is a last-ditch effort to create more welfare dependency in Texas.

Medicaid’s proponents claim the entitlement program lowers health care costs. However, this is untrue. Medicaid’s costs have consistently increased due to regulations, rising drug prices, medical device costs, and increased use of long-term and behavioral health services. According to a recent report from the Centers for Medicare and Medicaid Services, Medicaid expenditures are expected to rise at an average annual rate of 5.7 percent from 2017 to 2027, a rate that far exceeds annual U.S. gross domestic product growth. Additionally, medical assistance programs under the ACA are a clear and perfect example of cost-shifting within America’s health care system.

In a recent article published in Forbes, the Foundation for Government Accountability’s Nic Horton, Jonathan Ingram, and Josh Archambault argue expanding Medicaid in any state would harm those in real need. “Details aside, there is one fact expansion supporters cannot escape: every penny spent on expansion is a penny stolen from the state’s most vulnerable citizens.

With rising numbers of Medicaid enrollees, there is also less accountability. From 2013 to 2018, the number of Medicaid enrollees increased by nearly 28 percent, to more than 67 million. In 2017, the cost of Medicaid reached $581.9 billion. Among these growing problems are rampant fraud, waste, and abuse throughout the Medicaid system.

One solution is for states to implement eligibility verification systems. After the Illinois Department of Healthcare and Family Services launched the Illinois Medicaid Redetermination Project in 2012, the Prairie State removed 400,000 ineligible recipients and saved an estimated $350 million per year.

“Texas is often criticized for choosing to not expand Medicaid but the decision is based, in part, on higher-than-expected costs and research showing that overall health outcomes have not improved for expansion populations,” said Elizabeth O’Connor, legislative fellow with the Texas Public Policy Foundation. “Instead of expanding an ineffective, bureaucratic program, Texas policymakers should look to state-based initiatives targeting access to health care. Solutions such as the use of Federally Qualified Health Centers and improving telemedicine options can increase access and affordability in health care for lower-income Texans.”

Alternatives to Medicaid expansion are abundant, and have been explored more thoroughly since the onset of the COVID-19 pandemic. Examples include repealing certificate of need laws, the expansion of primary care agreements, as well as expanding telehealth options and health savings accounts. Moreover, in 2021, The Heartland Institute released the American Health Care Plan, which would provide Americans with pro-liberty solutions to several problems facing our health care system today. These initiatives would expand health care access for those in need, and create cost-effective solutions.

The following documents examine Medicaid reform and expansion in greater detail.

Don’t Wait for Congress to Fix Health Care
https://www.heartland.org/publications-resources/publications/dont-wait-for-congress-to-fix-health-care
In this Policy Brief, Heartland Senior Policy Analyst Matthew Glans documents the failure of Medicaid to deliver quality care to the nation’s poor and disabled, even as it drives health care spending to unsustainable heights. Glans argues states can follow the successful examples of Florida and Rhode Island to reform their Medicaid programs or submit even more ambitious requests for waivers to the Department of Health and Human Services – a suggestion the Trump administration has encouraged.

The Growing Medicaid Expansion Bubble
https://www.heartland.org/news-opinion/news/the-growing-medicaid-expansion-bubble?source=policybot
In this edition of the Consumer Power Report, Executive Editor Justin Haskins examines Medicaid expansion and all the problems it has created for states, physicians and patients. “Despite the lack of attention the issue is getting, the growing Medicaid population could lead to state government meltdowns around the country and a national health care crisis for which most Americans are completely unprepared,” wrote Haskins.

Here’s Why States Must Resist the Temptation to Expand Medicaid
http://www.forbes.com/sites/sallypipes/2015/07/27/heres-why-states-must-resist-the-temptation-to-expand-medicaid/ - 420cec6d5b80
Sally Pipes, president of the Pacific Research Institute, argues in this Forbes piece states should resist any push to expand Medicaid. Pipes recommends replacing Medicaid entitlements with block grants. “If governors and state legislatures really want to help low-income folks while keeping their budgets under control, they should insist Washington[, DC] replace the failed, open-ended Medicaid entitlement with block grants pegged to inflation,” wrote Pipes.

Government Report Finds Obamacare Medicaid Enrollees Much More Expensive than Expected
http://www.forbes.com/sites/theapothecary/2016/07/20/government-report-finds-that-obamacare-medicaid-enrollees-much-more-expensive-than-expected/ - 75a85aba2dd0
Brian Blase wrote in Forbes the costs for newly eligible adults were not decreasing as expansion supporters predicted they would. Blase says in a new report, HHS says newly eligible adult Medicaid enrollees cost about 23 percent more than the Medicaid enrollees who were eligible prior to expansion.

Research & Commentary: States Pursue Work Requirements for Medicaid
https://www.heartland.org/publications-resources/publications/research--commentary-states-pursue-work-requirements-for-medicaid?source=policybot
Senior Policy Analyst Matthew Glans examines efforts by several states to add work requirements to their Medicaid programs. “Implementing Medicaid work requirements would be a good first step for Medicaid-expansion and non-expansion states toward helping to limit the rising costs of Medicaid,” Glans wrote.

Why States Should Not Expand Medicaid
https://www.heartland.org/publications-resources/publications/why-states-should-not-expand-medicaid?source=policybot
Writing for the Galen Institute, Grace-Marie Turner and Avik Roy outline 12 reasons states should not expand Medicaid and should instead demand from Washington, DC greater control over spending to better fit coverage expansion to states’ needs, resources, and budgets.

Effect of Medicaid Coverage on ED Use – Further Evidence from Oregon’s Experiment
http://www.nejm.org/doi/pdf/10.1056/NEJMp1609533
Amy Finkelstein, Sarah Taubman, Heidi Allen, Bill Wright, and Katherine Baicker examine the effect Medicaid coverage has on emergency room use. They found people enrolled in Medicaid significantly increase their emergency room visits for around two years after they first sign up. “For policymakers deliberating about Medicaid expansions, our results, which draw on the strength of a randomized, controlled design, suggest that newly insured people will most likely use more health care across settings – including the [emergency department] and the hospital – for at least 2 years and that expanded coverage is unlikely to drive substantial substitution of office visits for ED use.”

Medicaid Increases Emergency-Department Use: Evidence from Oregon’s Health Insurance Experiment
https://www.heartland.org/publications-resources/publications/medicaid-increases-emergency-department-use-evidence-from-oregons-health-insurance-experiment
Sarah Taubman, Heidi Allen, Bill Wright, Katherine Baicker, and Amy Finkelstein use the Oregon Health Insurance Experiment to study emergency department use among 25,000 lottery participants over a period of about 18 months after the lottery. The authors found, “Medicaid coverage significantly increases overall emergency use by 0.41 visits per person, or 40% relative to an average of 1.02 visits per person in the control group.”

Evidence Is Mounting: The Affordable Care Act Has Worsened Medicaid’s Structural Problems
https://www.heartland.org/publications-resources/publications/evidence-is-mounting-the-affordable-care-act-has-worsened-medicaids-structural-problems
Brian Blase examines the effect of the Affordable Care Act on Medicaid. Blase’s findings reveal Medicaid expansion has worsened many of the structural problems in the program. “The unanticipated expense casts doubt on the value of the ACA Medicaid expansion. The enhanced federal match incentivizes states to boost ACA expansion enrollment and to categorize Medicaid enrollees as ACA expansion enrollees, and also encourages states to set high fees for ser­vices commonly used by expansion enrollees and high payment rates for insurers participating in states’ Medicaid managed care programs,” wrote Blase.
 

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this subject, visit Health Care News, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance!

Author
Christina Herrin is a former state government relations manager at The Heartland Institute.
cherrin@heartland.org @_Free2Choose