A little-known part of the pandemic relief bill that President Biden signed into law last week includes a big incentive for Texas to expand Medicaid to more low-income people.
The American Rescue Plan Act includes a two-year increase in federal funding for states that expand their Medicaid programs. Texas is one of just 12 states that still haven't decided to expand the program, which mostly serves children, people with disabilities and low-income older adults.
The federal government typically picks up about 62% of the costs of Texas’ Medicaid program, although it’s been a bit more during the pandemic because of past relief bills.
If Texas expands its program, the federal government would take on an extra 5% of the program’s costs, according to Anne Dunkelberg, who oversees health care policy for the public policy think tank Every Texan.
“The new plan says to the 12 states like Texas that haven’t expanded Medicaid that if you do it, we are going to give you a great big bonus,” she said.
Dunkelberg said this bonus could amount to about $5 billion over two years, according to some estimates.
“Medicaid is by far the hugest source of federal funds in every state’s state budget — not just Texas,” she said. “So when you make changes as big as 5 percentage points, it brings an enormous amount of funding into the state.”
Texas has long had the highest rate and number of uninsured people in the country. Experts have partly blamed this on the state’s refusal to expand Medicaid to more low-income people through the Affordable Care Act. The 2010 federal health care law pays a whopping 90% of the expanded program.
Dunkelberg said there’s a large body of research that has found that expanding the program would be “cost neutral or even save money for the state budget.”
There is also evidence that expanding Medicaid has reduced health disparities, which have been exacerbated by the pandemic. Latinos and Black Americans have been significantly more likely to be hospitalized or die from COVID-19 compared to white Americans.
Congressman Lloyd Doggett, a Democrat who represents parts of Austin, said it’s “foolish” that Texas lawmakers have refused to expand the program thus far.
“We have included a financial incentive for Texas to do this,” he said. “I hope the timing of the incentive … will get the coverage that we should have had long ago in Texas.”
It’s estimated between 1.4 million to 1.5 million low-income Texans could gain health insurance under an expanded Medicaid program. Experts also expect that number has likely grown during the pandemic because so many Texans have lost health insurance in the past year.
“No one really has those numbers yet,” Dunkelberg said. “But we fully expect we are going to see a significant increase. That is our Achilles’ heel. When people lost all their income or their jobs, they might have slipped from getting by reasonably well to actually falling below the poverty line.”
Because of the financial and public health implications of the pandemic, stakeholders in the state have said they hope lawmakers will finally seriously consider expanding Medicaid this legislative session.
In a joint statement this week, Democratic Reps. Garnet Coleman, Chris Turner, Nicole Collier, Rafael Anchía and Donna Howard said the pandemic has raised the stakes for Medicaid expansion in Texas.
“The pandemic has left many Texans sick, unemployed, and without health coverage options,” their statement said. “The members of our caucuses have filed numerous bills offering a variety of options for expansion that make sense for Texas. We hope that the state leadership will work with us to find a solution."
Both Democrats and Republicans have filed bills this session aimed at expanding Medicaid, Dunkelberg said.
Most notably, state Rep. Lyle Larson, a Republican from San Antonio, filed legislation that would put Medicaid expansion to a statewide referendum.
Republicans have also signed on as co-authors on other Medicaid expansion bills.
“It’s really the first time for several years that we have had bipartisan leadership on Medicaid expansion,” Dunkelberg said.
