A Policy Double-Feature for Health Care Fans

Friday, March 8 was was a double-feature for Capitol watchers and health care fans, but the policy in the spotlight will touch every Texan. Act I: House Hearing on Medicaid Expansion

Chairman Pitts of the House Appropriations committee devoted three hours to invited testimony on Medicaid expansion and Texas. Legislative Budget Board (LBB) staff laid out their estimates of costs, noting that they are working on—but have not yet released—estimates of state-budget savings, increased insurance tax revenues, or Medicaid drug rebate growth Texas would gain.  The LBB assumes lower administrative costs and much lower Medicaid adult enrollment “take-up” than Texas' Health and Human Services Commission (HHSC) (LBB predicts only 65 percent of eligible adults enroll, HHSC says 75 percent), but under either model the ratio of federal funds gained to state dollars needed is dramatic in early years, because the federal government pays 100 percent of expansion costs for three years.

A strong economic argument for expansion was laid out by former Deputy Comptroller Billy Hamilton, who called it the “greatest fiscal opportunity” for Texas in his 30+ years of public policy work. (You can watch this clip of the testimony.)

Texas Public Policy Foundation analyst John Davidson spoke in opposition.  Dallas County Judge Clay Jenkins and Harris County Judge Ed Emmett both spoke of the enormous social and fiscal benefits to be gained, emphasizing anticipated benefits from increased access to mental health care for low-income county residents.  Closing out testimony was Bruce Bradford, CEO of the North Dallas Chamber of Commerce, the most recent urban Texas Chamber to join the list in support of Medicaid expansion.

The hearing was punctuated as usual with both juicy factoids:

• Vice Chairman Turner pointed out that the LBB estimates of state costs versus federal funds gain for the 2014-2015 budget represented a 20-to-one gain for Texas.  Representative Howard underscored the Hamilton and Associates report finding that in 2014-2015, Texas would see $1.2 billion in state budget general revenue savings (offsets) if the expansion is rolled out January 2014.
• The Dallas Morning News has already cited me as the no-fun-at-all person clarifying that federal funds for Medicaid expansion are not like a block grant that, like CHIP, actually reallocates one states’ unspent funds to other states.  To make up for that, I will add here what witnesses at the hearing also noted—and what I wish the Morning News would also have said—that if we do not act on this opportunity, Texas taxpayers will help pay through federal taxes for the rest of the country to expand Medicaid, will pay continued higher-than-needed local health care taxes, and will lose out on the jobs and economic multiplier effects of netting billions more in federal health care dollars.
• Many low-income Texans would be exempt from any penalty under the Affordable Care Act (ACA)'s individual mandate, the LBB noted: those facing premiums in the health insurance marketplace higher than 8% of family income, as well as families with incomes below the federal income tax filing threshold are exempt.

There were also a few breathtaking misstatements to correct:

• The Texas Medical Association’s biennial physician survey has been mis-cited frequently, as the Dallas Morning News noted,and this hearing was no exception.  Only about 31 percent of surveyed doctors said they accept all new Medicaid patients. Important difference between this and taking no new Medicaid patents.  The same survey found that 57 percent of surveyed doctors take at least some new Medicaid patients.
• No, the ACA did notmake your employer-sponsored insurance taxable income.  Confusion likely results from the fact that the IRS will be in charge of checking your insurance status.
• Also misunderstood:  The ACA did not add a new 3.8 percent tax on all real estate sales.  The ACA did add a new tax on the roughly 3 percent of “high earner” U.S. households who earn over $200,000 (individual) or $250,000 (couple), applied to investment income of all types.
• Rice University Hobby Center researchers Drs. Mike Cline and Steve Murdock have projected that 49% of Texas’ expected ACA coverage gains will come from U.S. citizen adults under 138 percent of the federal poverty level (FPL) and kids under 200 percent of FPL. HHSC testified they attribute a lower share to Medicaid, but they also project about 1.5 million adults and kids gain coverage, which is about one-quarter of 6.1 million total uninsured Texans—no matter how you do your arithmetic.  One legislator referred to this potential Medicaid expansion group (1.1 million adults, 400,000 children) as a “tiny population.” More important than what precise fraction of Texas’ uninsured the potential adult Medicaid group comprises is that they are the poorest of our uninsured, and that no alternative is offered for their access to decent, affordable care.
• Another often-confused reference is to the $29 billion maximum dollars budgeted for our 2011 Medicaid 1115 waiver:  over five years, if Texas can put up $12 billion in state dollars, we can pull down $17 billion in federal match (totaling $29 billion).
• Good information about how much coverage and care cost—and how little these Texas families really earn—is so important to weighing the Medicaid expansion question.  One legislator suggested that greater transparency in health care pricing might make insurance coverage affordable for the potential Medicaid expansion adults.  The Kaiser Family Foundation has calculated that a health policy for family of four with annual earnings of about $29,400—near the top of the Medicaid expansion income group—would likely cost over $10,100 in 2014 for a parent in his thirties (over a third of gross income), and over $12,100 for a parent in his forties at the same income (over 40 percent of gross income).

Chairman Pitts closed the Medicaid section of the hearing by noting that it was only the beginning of the conversation about covering more Texans under the ACA.

Act II: Researchers Explain the Impact of this Choice for Each County in Texas

Just down the hall, as the hearing went into its third hour of Medicaid Expansion discussion, 80-something Capitol folk tore themselves away from the hearing to attend our research briefing, sponsored by Methodist Healthcare Ministries, exploring similar ground.  Our speakers laid out two recent academic models of the impact of insurance coverage gains under the ACA in each Texas county.

The first report was developed in 2012 by Dr. Steve Murdock and Dr. Michael Cline of the Hobby Center for the Study of Texas at Rice University.  Dr. Cline described how they built the modelbefore the Supreme Court decision that made the Medicaid expansion for near-and-below poverty adults optional for states—and left that group without an affordable coverage option under the ACA in states that do not expand Medicaid.  

Dr Murdock noted that their coverage estimates are higher than those of LBB, and indicated with a smile he believes his team’s model is better.  The researchers showed how their model of U.S. citizen adults below 138 percent FPL and children to 200 percent FPL in Texas is very close in size to the HHSC’s estimates of adults potentially covered and the  higher “welcome” enrollment by already-eligible children.  A key finding was that the Medicaid-income level enrollment is projected to make up about 49% of the overall reduction in Texas uninsured.  The Center for Public Policy Priorities (CPPP) presented a few quick slides updating the status of Medicaid expansion in Texas and across the states.

The Hobby center model has been used for several other studies of the ACA’s impact in Texas.  CPPP published county-level fact sheets detailing how many county residents gain insurance with and without the Medicaid expansion, paired with estimates of the new federal Medicaid dollars spent by county through 2017, based on Texas HHSC’s data.  Billy Hamilton Associates published an important report on the potential savings and benefits for state and county governments using the Hobby Center model, also commissioned by Methodist Healthcare Ministries along with Texas Impact.

And, Dr Leighton Ku from the School of Public Health and Health Services at the George Washington University used the model to look at access to primary care in Texas and how increased insured rates—with and without Medicaid expansion—will affect the access issues.

He explained that Texas’ statewide primary care capacity today is well below the national average, but the average hides much deeper access problems in pockets across the state.  Noting that higher insured rates will not change Texas’ health needs but will increase demand, he said that the ACA coverage increases (from both private and public insurance) will create short term demand pressures.

But in the longer term, he said, insurance expansion could help build primary care capacity.  Texas’ low primary care capacity is partly due to our high uninsured rate, because not enough paying patients can make it hard for physicians to make a living, particularly in rural areas.  In addition, he said, Medicaid expansion and private insurance coverage would fuel major employment growth in health care.

The briefing closed with invited comments from the Texas Hospital Association, Texas Academy of Family Physicians, and Texas Association of Community Health Centers.  All speakers applauded new hard-negotiated progress toward a broader scope of practice by Advance Practice Nurses and Physician Assistants in Texas.  The need for more public investment to keep Texas medical students practicing here in Texas, and for health care systems to evolve to support professionals who expect time for child-rearing and family life was discussed.  Finally, each commenter agreed that Texas’ ability to grow the primary care workforce will be much stronger with the additional $6 billion per year in net federal Medicaid payments for health care from 2014-2017 that HHSC projects will be spent if we move ahead with a Medicaid expansion.

Videotapes of the researcher’s remarks will be posted at Methodist Healthcare Ministries’ web page soon.

Written by: Anne Dunkelberg, Center for Public Policy Priorities and cross-posted from Better Texas blog