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Hobby and Ellis on Medicaid

State Sen. Rodney Ellis and former Lt. Gov. Bill Hobby lay out the reasons why quitting Medicaid would be a disaster for the state.

Texas already has the unfortunate distinction of having the highest uninsured population in the country. It is estimated that providing care to the uninsured costs the insured family $1,500 dollars annually in increased premiums.

Massive-scale projects, like abolishing the Medicaid program, usually require a well developed plan that includes stakeholder input, pilot projects, staggered implementation and a funding source. If Texas has a viable state plan to cover its 3.1 million Medicaid beneficiaries, it has yet to be seen. In late 2007, Texas proposed a Medicaid waiver to then-President George W. Bush. The waiver was not approved by the Bush administration because its benefits were lacking and annual limits were too low. Three years later, that waiver is still pending.


Beyond the lack of a viable plan for dropping Medicaid, there are no funding sources available to replace the loss $20 billion annually in federal matching funds which Texas gains because 60 percent of our Medicaid program is paid for with federal dollars. The Texas economy would then suffer the loss of $60 billion in economic activity. Prominent Texas economists have estimated that for every one extra federal matching Medicaid dollar spent $3.25 worth of local economic activity is generated.

If lack of a plan and funding are not reason enough to throw out that deficit solution, opting out of Medicaid has the potential to affect a large percent of our state’s population. Medicaid pays for care for seven out of 10 nursing home residents, and for virtually all Texans with disabilities who get care in residential settings, 55 percent of all births in Texas, and for the health insurance for more than 2.3 million Texas children. By reducing or eliminating Medicaid these individuals would be forced to seek care in local hospital emergency rooms, which are already struggling to cover the cost of the uninsured as are Texas taxpayers.

But remember that the cost of treating uninsured Texans in emergency rooms is borne by city and county government, not state government. The state government can chalk up all the “savings” it wants by simply throwing people out on the street, and then it can pat itself on the back for being “fiscally responsible” by balancing the budget without raising taxes. The fact that you’ll wind up paying a lot more anyway won’t be their problem, as far as they’re concerned.

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