Texas lawmakers move closer to a deal to expand coverage

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By Consumers Union on Tuesday, April 23rd, 2013

Today Texas moved one step further towards potentially reducing the state’s vast population of low-income working uninsured people. HB 3791 was passed out of the House Appropriations Committee on a 15 to 9 vote. The bill now goes to the full House for consideration.

Dubbed the “Texas Solution” to expanding coverage in the state, the bill avoids expanding Medicaid as envisioned by the Affordable Care Act (“Obamacare”) and instead calls for “private market solutions” to cover these newly eligible Texans.

The bill relies on using available federal funds initially intended to expand Medicaid but potentially available for an alternate proposal that places newly eligible enrollees on private coverage, apparently somewhat similar to a proposal recently passed in Arkansas.

What little the state of Texas is required to put up to pay for this new coverage will be funded by “leveraging premium tax revenues; and achieving cost savings through offsets to general revenue healthcare costs or the implementation of other cost savings mechanisms.” Essentially, the bill diverts money from an existing 1.75% state tax on health insurance premiums and envisions savings from improved efficiency to avoid adding new general revenue costs to the state.

Though Consumers Union strongly supports expanding Medicaid as set forth by the Affordable Care Act, we could support this alternate proposal to achieve the same goal – if it actually provides quality, affordable coverage to the vast population of uninsured low-income working Texans.

Unfortunately, the bill doesn’t stop there.

HB 3791 also sets requirements for how the state would restructure Medicaid if federal officials were to change Medicaid into a “block grant funding system”. Under a block grant system Texas would largely set its own rules for using federal funds to provide coverage to the state’s poorest citizens. Although turning Medicaid into a block grant program seems unlikely to happen anytime soon, the parameters laid out in this bill are nonetheless bad news for low-income Texans.

The bill proposes a fundamental change to Texas Medicaid away from guaranteed benefits, to denying full coverage to those who can’t afford to pay their “share”. The bill would strip away the coverage guarantee provided by Medicaid today and replace it with sliding scale subsidies to purchase private plans, leaving poor Texans to pick up the difference if subsidies aren’t sufficient – a major challenge for low-income families.

But, these provisions apply only if Texas gains permission from Congress or the Federal Administration to convert Texas Medicaid to a block grant program.

Texas’ history with block grants is disastrous. For example, in 2012 Texas received just $294 in financial assistance per child in poverty, compared to the $2,782 per child that New York received, according to the Center for Public Policy Priorities.

Clearly Texas shouldn’t be allowed to restructure federally funded health coverage for the poor. This proposal moves several steps backwards from a strong Medicaid program. But given that this is unlikely to become a reality anytime soon, it’s important to focus on the more positive side of this bill.

HB 3791 defies the odds in Texas. For months now, Governor Perry and leaders in the Capitol have flatly rejected expanding Medicaid to all low-income Texans. Under this bill, Texas has a chance to achieve the same goal through private insurance coverage. With an estimated 29% uninsured residents, it’s critical that the state finds a way to expand health coverage. The “Texas Solution” proposed in this bill sets the state on that path.

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