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Who needs Medicaid?

Here’s an early peek at what we have to look forward to next year.

Some Republican lawmakers — still reveling in Tuesday’s statewide election sweep — are proposing an unprecedented solution to the state’s estimated $25 billion budget shortfall: dropping out of the federal Medicaid program.

Far-right conservatives are offering that possibility in post-victory news conferences. Moderate Republicans are studying it behind closed doors. And the party’s advisers on health care policy say it’s being discussed more seriously than ever, though they admit it may be as much a huge in-your-face to Washington as anything else.


State Rep. John Zerwas, R-Simonton, an anesthesiologist who authored the bill commissioning the Medicaid study, said early indications are that dropping out of the program would have a tremendous ripple effect monetarily. He is not ready to discount the idea, he said, but he worries about who would carry the burden of care without Medicaid’s “financial mechanism.”

“Because of the substantial amount of matching money that comes from the federal government, there’s an economic impact that comes from that,” Zerwas said. “If we start to look at what that impact is, we have to consider whether it’s feasible to not participate.”

State Sen. Jane Nelson, R-Flower Mound, who chairs the Senate Public Health Committee, said dropping out of Medicaid is worth considering — but only if it makes fiscal sense without jeopardizing care. Currently, the Texas program costs $40 billion per biennium, with the federal government footing 60 percent of the bill. As a result of federal health care reform, she said, millions of additional Texans will be eligible for Medicaid.

“I want to know whether our current Medicaid enrollees, and there certainly could be millions more by 2014, could be served more cost efficiently and see better outcomes in a state-run program,” Nelson said.

I don’t know about you, but I don’t recall the subject of a total Medicaid withdrawal being part of the just-concluded campaigns. Was this what all you Republicans were voting for?

Let’s consider the numbers for a minute. If Texas’ cost per biennium for Medicaid is 40% of $40 billion, that’s $16 billion. So you could zero out Medicaid, not replace it with anything, and still have a $9 billion gap in the budget. What else you got?

From what Sen. Nelson is saying, there would be some kind of replacement, though it’s hard to imagine what they might have in mind. But assuming there is something, then the net cost reduction would be considerably less than $16 billion. Given our recent experiments with privatization, would anyone be shocked if whatever they proposed as an alternative wound up costing a lot more, and saving a lot less, than they projected? And what do you suppose the effect of not having that $24 billion in federal dollars come into the state be on the economy?

You can only talk about the numbers for so long before you have to acknowledge the effect on the people who currently rely on Medicaid. They’re still going to get sick and need to get medical help. Who will pay for it in the absence of Medicaid? Cities and counties and their associated hospital districts would be my guess. I wonder what all the state’s Mayors and County Judges think about this.

You know when I said yesterday that Job One for the remaining Democrats in the Legislature will be to remind everyone who voted for a more Republican government that they were about to get it, good and hard? This is the sort of thing I had in mind. There will be plenty more where this came from.

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  1. John Cobarruvias says:

    you give the average voter so much more respect than they deserve. All of the reasons for Medicare will be lost as soon as someone yells SOCIALISM!

    I have no respect anymore for these people and will have no pity on them either.

  2. Billy-Bob says:

    Understand what Republicans are saying: under health care reform, people who are eligible for Medicaid will also be eligible for federal tax credit subsidized health care through Exchanges. The state could quit Medicaid and beneficiaries would still get health care, although through a different vehicle.

    The people who now have Medicaid nursing home care would NOT have that benefit covered, so Texas would have to devise a state-paid nursing home program (the current program is heavily subsidized by Medicaid cost sharing).

    So Texas would save on dropping Medicaid and incur new costs on nursing home care. The current study is supposed to deliver an analysis of what the net budget impact might be.

  3. Jeb says:

    Sixty-five percent of Medicaid funding in Texas goes to nursing homes. So, a state funded nursing home program in place of Medicaid would cost, on its own, $26 billion.

  4. […] Tomasky on the question of Texas ditching Medicaid: The states’ share of Medicaid costs has been an immense burden for two decades, […]

  5. Hope says:

    @Billy Bob – Subsidies will be available to those with incomes between 133-400% of federal poverty level, with those below 133% eligible for Medicaid not subsidies.

    @Jeb – Nursing facility care accounted for 13% of Medicaid spending on health care services in FY07 (see, page 6-8, Figure 6.6)

  6. […] Also in Texas, voters there will soon learn that elections have consequences. Such as potentially dropping out of the federal Medicaid program to help fill in the $25 billion budget shortfall. […]

  7. […] you need to know about the potential Republican effort to opt out of Medicaid can be taken from this quote: “If people are in superbad poverty, that’s one thing,” says […]