Texas Should Say Yes to Medicaid Expansion
Texas is one of the only states left in the nation where cooks, child care providers, cashiers, and other workers with incomes below the poverty level typically have no viable health insurance options because the Legislature continues to block Medicaid expansion. This legislative session, state leaders should finally say yes to Medicaid expansion so that these Texans have access to reliable, consistent care to get healthy before a pregnancy, detect and stop cancer before it spreads, get access to mental health treatment, avoid sinking into medical debt, and more.
Here’s a closer look at what Medicaid expansion is, why Texas needs it, and options for the Legislature.
The gap between Texas and other states started with the 2012 U.S. Supreme Court ruling upholding the Affordable Care Act (ACA). The ACA was designed to provide insurance to people above the federal poverty line using subsidies on HealthCare.Gov. It was designed to provide insurance to people below the poverty line (and people with incomes up to 138 percent of the poverty line) using Medicaid expansion. In its 2012 decision, the Supreme Court ruled that states had the authority to decide whether they would implement this “Medicaid expansion” or not. After North Carolina passed Medicaid expansion in March 2023, Texas is one of only ten states that has not adopted Medicaid expansion yet.
Texas has the highest uninsured rate in the nation — in large part because of the state’s decision on Medicaid expansion. Census Bureau data show that in 2021, 18.0 percent of Texans missed out on health coverage compared to 8.6 percent nationwide. Nearly a quarter (24.3 percent) of all Texans aged 19-64 were uninsured. Texas lagged behind neighboring states that have implemented Medicaid expansion: the uninsured rate in New Mexico was 10.0 percent, and the Arkansas rate was 9.2 percent. Texans of all racial/ethnic backgrounds identified in the Census Bureau data — including Black, White, Hispanic, Asian, and American Indian — had a higher uninsured rate than the national rate. The data also showed significant racial/ethnic disparities, with particularly high uninsured rates among Texans identified in the report as Hispanic or American Indian.
Because the state hasn’t implemented Medicaid expansion, workers with jobs below the poverty line typically have no viable health insurance options. Many adults with low-wage jobs do not receive job-based insurance for themselves and do not make enough money to afford full-priced health insurance. Before the ACA, every state covered children in Medicaid, but states were not required to cover the children’s parents or most other adults. Under the ACA, Medicaid expansion was intended to cover adults below the poverty line, so the ACA does not provide them with subsidies to make coverage on HealthCare.Gov affordable. In Texas, low-income adults typically do not qualify for Medicaid insurance, which our state largely limits to children, pregnant women, seniors, and people with severe disabilities. For example, in 2023, if a single parent with two kids had a yearly income between $4,008* and $24,860, then he or she earns too much to qualify for Texas Medicaid and not enough to qualify for ACA subsidies.
Research shows that when people have insurance, they are healthier and less likely to die prematurely. While there is a valuable patchwork of services for the uninsured in Texas, including community health centers, these clinics offer preventive and primary care services, not specialty care and treatment. And many charity providers simply can’t keep up with demand. Care is also unavailable in many counties, especially rural ones. Many services — such as cancer treatment, kids’ eyeglasses, support for chronic diseases, and specialty care — are often available only to Texans with insurance. Uninsured individuals typically must wait longer to seek medical care, leading to worse health outcomes and higher costs for families and taxpayers, and they are less likely to see a health care professional. Nearly 3,000 Texans died prematurely — just looking at Texans age 55-64 from 2014 to 2017 — because Texas didn’t implement Medicaid expansion.
Under Medicaid expansion, an estimated 1.4 million uninsured low-wage Texans would become eligible for Medicaid health insurance — covering far more people than any other health coverage policy the state could implement. That estimate, released by Kaiser Family Foundation (KFF) in early 2021, is based on data from 2019. Additional details from the KFF estimate shows that nearly 800,000 of those 1.4 million Texans were in the Coverage Gap, meaning their income was below the poverty level and therefore they likely had no affordable insurance option. The rest of the 1.4 million Texans have incomes between the poverty level and 138% of the line. In addition to covering adults, Medicaid expansion has been shown to indirectly decrease the children’s uninsured rate by connecting more families with health coverage.
Pumping billions of Medicaid expansion dollars into Texas would also boost the state economy, help rural hospitals stay open, create jobs, and take pressure off of property taxes. By implementing Medicaid expansion, Texas would draw down $10 billion or more per year in federal health funding. It would create — and save — health care jobs. (Texas studies in 2013 and 2020 estimated it would generate over 230,000 new Texas jobs in the near term.) It could prevent more closures of rural hospitals. It would reduce the need for local governments to use property tax revenue to provide health care services to uninsured residents. It would also cut down the amount of uncompensated care that hospitals provide. Medicaid expansion would also reduce pressure on the monthly insurance premiums paid by Texans who already have health coverage. These are some of the reasons that so many Texas leaders from the business community, local government, and other sectors have endorsed Medicaid expansion.
Medicaid expansion would be neutral — or beneficial — for the state budget. The federal government is required by statute to cover 90 percent of the cost of Medicaid expansion. Recent Medicaid expansion discussions in Texas have theorized that the funding for the remaining “non-federal” 10 percent share of the cost could be financed in part by redirecting a portion of local government funds and health care provider funds that Texas uses to cover the state’s share in the current 1115 Medicaid Waiver. That funding could be combined with state budget savings made possible by Medicaid expansion and as well as new revenue sources to ensure costs are fairly distributed statewide and across all the sectors that would be receiving more Medicaid revenue. In fact, a study published by the Episcopal Health Foundation found that Texas would save money in the state budget by implementing Medicaid expansion. Other states reduced state spending in particular areas — such as mental health and corrections — by using federal Medicaid expansion dollars. In addition, the American Rescue Plan Act of 2021 makes the fiscal case even stronger for the state. Akin to a “federal signing bonus” for expanding Medicaid, the state could see additional federal funding from two-year American Rescue Plan (ARP) fiscal incentives, to the tune of nearly $4.5 million in increased FMAP alone. That bonus would cover Texas’ cost of expansion fully for the first three years even before accounting for all the cost savings resulting from Medicaid expansion.
Medicaid expansion has been a big success in other states. This Kaiser Family Foundation report summarized over 400 studies of Medicaid expansion, concluding that expansion has been a success — in many ways — in the states that have implemented it. For example, residents of those states have seen better overall health outcomes, more financial security, and less medical debt.
A strong majority of Texans support Medicaid expansion. A poll released by the Episcopal Health Foundation in February 2023 found that 72 percent of Texans support Medicaid expansion.
So far, the Legislature and Governor have failed on Medicaid expansion. In 2021, 76 Representatives — more than half of the House — signed onto a bill to draw down Medicaid expansion funding. However, that bill, like other bills on Medicaid expansion, did not receive a hearing or vote in the House or Senate in 2021. When amendments to accept Medicaid expansion came up in the full House and full Senate in 2021, both chambers voted them down. The only Medicaid expansion hearing at the Legislature for the last several years was in the House in 2019.
Lawmakers have filed bills during the 2023 session with two main approaches to Medicaid expansion. Numerous legislators have filed bills to implement a straight-forward Medicaid expansion, some including an opportunity for Texans to vote on a constitutional amendment calling for the coverage. Additionally, Senator Nathan Johnson and Rep. Julie Johnson have proposed alternatives to the traditional Medicaid expansion bills. They propose a Medicaid Waiver, similar to those used in other conservative states, to establish a Live Well Texas program that provides an insurance option to Texas adults below 138 percent of the poverty level. The federal government would pay 90 percent of the costs.
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* Parents in Texas have a much lower Medicaid income limit than their children. For a Texas family of three with one parent, the parent’s Medicaid monthly income limit is $230 per month plus an additional "income disregard" of $104 per month, for a total of $334 per month or $4,008 per year (in 2023). In comparison, the children in a family of three can be eligible for Medicaid up to over $30,000/year.