State sharply lowers estimate of Medicaid expansion cost

AUSTIN - On the heels of Gov. Rick Perry's declaration that Texas will not expand Medicaid because it is too costly, his health and human services commissioner said Thursday that fully implementing health care reform would cost the state about $11 billion less over 10 years than previously estimated.

Executive Commissioner Thomas Suehs told a Texas House subcommittee that the new estimate is between $15 billion and $16 billion in state costs over a decade, compared to the previous estimate of $26 billion to $27 billion.

The state would get an additional $100.1 billion in federal money over that time, according to the Texas Health and Human Services Commission - money that Suehs acknowledged would be attractive to local entities grappling with the cost of caring for the quarter of the state's population that currently is uninsured.

"If I was a county hospital district, I would be knocking on your door saying we need to re-debate" Medicaid expansion, perhaps with a push for a local option, Suehs said. That idea, in which a local agency would deal directly with the federal government to expand Medicaid in its area, has been cited by Bexar County Judge Nelson Wolff.

How to pay for it

"We're not debating whether somebody gets health care in this state, we're debating how you pay for it," Suehs said. "Either you are going to pay for it through the Medicaid program or private insurance through subsidies, or you're going to pay for it through local tax dollars."

Suehs said he agrees with Perry that Medicaid should not be expanded because it has too many problems that should be fixed first.

The federal health care law would expand Medicaid to low-income adults not now covered by the traditional program, which includes children, people with disabilities, the elderly poor and pregnant women.

If states opt in, the federal government will pick up all of the expansion's cost for three years. After that, states will pick up a gradually growing share capped at 10 percent.

Almost 1.6 million more Texans would be insured through Medicaid over 10 years if the program is expanded, the commission found.

"It (the federal portion) is a huge amount of money. You just can't leave that on the table, particularly when the burden falls on public hospitals that are funded by local taxpayers," said Wolff. He is head of the commissioner's court, which approves the budget for University Health System, a main provider of health care to low-income Bexar County residents.

Funding alternatives

Harris County Hospital District president and CEO David Lopez said he wants to talk with Perry's office about possible funding alternatives.

The local option would have to be discussed by all the area's health care providers, Lopez said."It's more than just a public hospital issue. All providers in our community are impacted by this, so they should all be part of the discussion."

Sen. Leticia Van de Putte, D-San Antonio, said she does not think a local option is available in the law as written, but she is making inquiries about what is possible. "This is real money, and it means real health care for Texans," she said.

The estimate of state reform costs has been revised downward for a number of reasons, Suehs said, including a reduced case load growth trend; a belief that fewer people than originally estimated will access the system; and a forecast that the increase in case load will be phased in more slowly.

Perry spokeswoman Catherine Frazier said the new cost figures don't change the governor's stand: "Medicaid spending already consumes more than 20 percent of our budget - it is an unsustainable, budget-busting program."

Broader debate issue

Anne Dunkelberg at the Center for Public Policy Priorities, which advocates for low- and moderate-income Texans, questioned whether a local option would let wealthier parts of the state get federal funds while those that could not come up with matching money would be left out.

"It's very much in the interest of all our urban hospital districts and pretty much all of our health care providers in general that we do this expansion," she said.

State Rep. John Zerwas, a Richmond Republican who heads the Appropriations subcommittee that looked at the issue Thursday, said he thinks expansion is up to the Legislature. The revised estimate is "still a very, very significant amount of money," he said.

Rep. Charles Schwert­ner of Georgetown, the GOP nominee for state Senate, saw more to debate than funding: "We do need to look at a judgment call as a Legislature on whether or not we want to expand a program that has really been for aged, blind, disabled, needy children and pregnant ladies to a group of individuals that are single adults."

Van de Putte said the reform would reach people who are working low-paying jobs and cannot afford health care.

"Yes, we have a you-pull-yourself-up-by-your-own-bootstraps mentality in Texas," she said. "The beautiful thing about Texans is we always know when neighbor needs to help neighbor."

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