A joint report to lawmakers today summarizes the current program and its fiscal cost to Texas and the impact to the state if Medicaid were eliminated. “Without significant reform at the federal level, states are left facing a no-win dilemma. Opting out of Medicaid means giving up federal tax dollars paid by the state’s residents to provide health care for our most vulnerable residents. Staying in the program forces states to pay for a federally-mandated expansion of Medicaid with little control over the program’s ever-rising costs, exacerbating an already unsound financial situation,” according to the report.
If Texas opted out of the federal program, Texas would lose $15 billion (SFY 2009) in federal matching funds for client services and hospitals and up to 2.6 million Texans could become uninsured. However, opting out of the program does not release certain obligations; Texas residents and business would still be required to pay federal taxes that support other state’s Medicaid spending, and hospitals would still be required under federal law to treat medical emergencies of the uninsured.
However, in 2011 total Texas Medicaid expenditures are expected to exceed $30 billion. With a 9% annual rate of growth, the Medicaid program will prove unsustainable over time with a rate of increase that “far exceeds growth in state tax revenue.” In light of this dilemma, the report proposes that policymakers pursue new flexibility and tools from the federal government “to effectively bend the Medicaid cost curve and ensure the program’s financial sustainability.”
Federal policy changes that would allow states greater control over the rising costs are detailed in the report and highlighted below:
- The federal government should introduce consolidated annual funding streams into the program and give the state latitude to implement market oriented reforms and greater client and provider accountability.
- The federal government should grant states additional flexibility to design Medicaid benefit packages that encourage individual decision-making and improve health outcomes.
- The federal government should revise the formula used to allocate federal Medicaid dollars. FMAP is fundamentally flawed, outdated, and inherently unfair because it ignores a state’s rates of poverty and uninsured. Texas, for example, has 10% of the nation’s population living below poverty and 13% of the nation’s uninsured yet receives less than 7% of federal Medicaid dollars.
- The federal government should waive state Medicaid maintenance of effort requirements in the ACA.
- The federal government should pay for 100% of Medicaid, CHIP, and uncompensated health care costs for undocumented immigrants. The federal government requires safety net hospitals to provide emergency care for undocumented immigrants and then compels states, counties, and public hospitals to bear part of the cost of that care.
- The federal government should give states more flexibility to use cost-sharing as a way to promote individual responsibility for personal health and wellness decisions.
A copy of the report on the Texas Tribune website: http://static.texastribune.org/media/documents/Impact_on_Texas_if_Medicaid_is_Eliminated.pdf
