Insurance & Benefits

Texas Can Expand Coverage Without Expanding Medicaid – Here’s How

Texas remains one of 14 states in the country that has yet to expand Medicaid, as its Republican leadership has refused to accept more federal money for expanding health insurance to more of our state’s poor families. DFW’s hospitals are behind Medicaid expansion, in part because Dallas is the largest city with the worst insured rate in the nation. Nationwide, 5.7 percent of children don’t have health insurance, but in Dallas county, that number is 14.3 percent. A number of factors have also decreased the number of children in rolled in CHIP. Hospitals (via taxpayers and consumers) end up paying for the healthcare of the uninsured one way or another, and improving access could bring down costs for those who ultimately end up footing the bill.

There are states that compare to Texas politically which have expanded healthcare coverage by focusing on those who don’t qualify for Obamacare subsidies but make too much money to qualify for Medicaid.

Conservative Indiana is one state that has expanded coverage to more people without expanding Medicaid in the traditional sense in 2015. A panel presented by Hall Render and the Dallas-Fort Worth Hospital Council brought in experts to discuss the Indiana workaround.

Indiana elected officials at every level of state government were resistant to the mandated coverage expansion that was part of the Affordable Care Act, and even after expanding Medicaid was made optional, pushed hard against Medicaid expansion, according to political consultant Brian Neal who worked with with then Governor Pence in Indiana.

Like Texas, Indiana’s 1115 waiver allowed the state to have more flexibility on how to distribute the funding, but it wasn’t a permanent solution. The shift began with business interests that stepped up to influence conservative leaders. Chambers of Commerce in Indiana, manufacturing companies, and others expressed their desire to expand coverage. “There were a number of stakeholders, including business groups and hospitals; everyone was in the boat,” Neal said.

Fewer uninsured meant lower rates of uncompensated care, the costs of which were eventually shifted to commercial insurance carriers via higher rates, which then impacted businesses. In Texas in 2016, Texas hospitals gave over $6.8 billion in uncompensated care back to the community. In short, expanding coverage would improve the bottom line for Texas business.

But strict criteria for receiving Medicaid created a large of group of working poor that still could not afford coverage. In Indiana, a family of three had to make just $4,698 dollars a year, or less than $13 a day, to qualify for Medicaid. In Texas, the number is $4,894 per year. Indiana and Texas have the fourth and fifth strictest income qualifications in the country. And if a person doesn’t have a child in Indiana, they don’t qualify for Medicaid no matter how poor they are.

And here’s the rub: if a family or individual makes less than 100 percent of the poverty level in the United States, they are not eligible for the subsidies on the healthcare marketplace. For a single adult, that is $15,415, and for a family, it is $26,344. So if the family makes between $4,698 and $26,344, they are on their own in terms of health insurance, and often remain completely uninsured, seeking costly emergency room medical care while all of society foots the bill.

The large gap between Medicaid eligibility and federal subsidy became a rallying point in Indiana, as the stakeholders saw a huge group of people who could be given coverage, and everyone had something to gain.

In 2014, Governor Pence’s office and the Indiana Hospital Association began negotiations to come up with a plan that would expand coverage without expanding Medicaid. A committee of members appointed by the governor and others chosen from a group of hospital CEOs helped design the plan. “Traditional Medicaid is not a system we need to expand,” Pence said at the time. “It is a system we need to change.”

The solution became what was known as the “Indiana Way,” branded as a local solution that avoided the baggage of agreeing to the expansion of a federal program. It built on a previous plan, the Healthy Indiana Plan, which was described as the protection of a home grown program rather than as an Obamacare expansion. “It was a Hoosier home-grown program with bipartisan support,” described Hall Render shareholder Tim Kennedy, who also worked on the deal. “We can build upon it and be better.”

The agreement rested on three principals: fiscal responsibility, personal accountability, and provider participation.

The coverage expansion would be funded by increasing existing hospital and cigarette taxes and did not include a general sales tax hike. It required accountability by incentivizing low income families and earners to contribute a small amount to an account that added benefits. Lastly, the providers agreed to be paid Medicare rates, which are usually lower than commercial insurance rates but higher than Medicaid rates, which was a key negotiating point. In Texas, less than 25 percent of physicians accept Medicaid.

If Indianans contributed to their account, they received comprehensive benefits that included vision, dental, and chiropractic care in addition to medical. It required no copayments, and was available to anyone up to 138 percent of the federal poverty line. Residents who made less than 100 percent of the poverty line did not have to contribute to their accounts to receive coverage, though if they did not contribute there were copays and the plan did not include dental, vision, and chiropractic care.

The contributions to the account, which were similar to a health savings account, ranged from $25 a month for someone who made between 100 and 138 percent of poverty to $3 a month for someone who made less than 22 percent of the poverty line. The plan also included a work requirement, which was not limited to employment, but included other productive activities. The plan allowed employers and charitable foundations to contribute to the power account as well.

In the end, the Healthy Indiana Plan 2.0 was put in place by executive order, and gave 400,000 people in Indiana health insurance coverage.

Texas is demographically much more diverse than Indiana, but conservative leadership that resists an expansion of federal power puts the health of their residents at risk, just like in Indiana. North Texas is one of the most expensive places to receive healthcare, and also has one of the highest uninsured rates in the country. Those uninsured residents are seeking medical care when they get sick, but it is costly emergency room visits and too-late interventions that often end up as treatment options. Those costs eventually make their way back to all of us through self-funded insurers and increased taxes. Perhaps business and healthcare leaders can come together with government officials to expand coverage and benefit the bottom line of the companies that power Texas’ robust economy. While these agreements are never easy, expanding coverage may not be as difficult as one might think.

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