Medicaid Expansion and Texas

By Paul Lenchner

In March 2023, North Carolina became the 40th state to expand to eligibility for Medicaid under the Affordable Care Act. Texas and nine other states, mostly in the South and all varying shades of red, are holdouts. Momentum seems to be building for expansion, but Texas’s leaders remain stubbornly resistant to change.

The Affordable Care Act gives states the option to expand Medicaid to provide healthcare for people who fall into a coverage gap. They are too poor to qualify for subsidized private insurance through the ACA but have too much income to be eligible for traditional Medicaid. For states that choose to act, Medicaid eligibility is extended to households with income up to 138% of the federal poverty level, or $41,400 for a family of four. Currently in Texas, to qualify for Medicaid an adult in a household of four can earn no more than $3,324 a year if there is only one parent and no more than $3,420 if there are two parents. This is about 13% of the poverty level and leaves hundreds of thousands of working Texas unprotected. Under the ACA, the federal government pays 90% of the cost of expanding Medicaid with states covering the remaining 10%.

The case for expansion is strong, a view that is not confined to the left. For example, the conservative editorialists at The Dallas Morning News headlined a February 2023 column, “Why Texas Republicans must expand Medicaid.” Most fundamentally, expanding Medicaid would help Texas address its status as the state with the highest percentage of uninsured people in the nation, 18% (about 5 million residents), more than double the national rate of 8.6%. More coverage will improve the state’s ranking on other health-related indicators. According to 2023 data from the Commonwealth Fund, a nonprofit health research organization, among the 50 states and the District of Columbia, Texas ranks 50th in adults who went without care in the past year because of cost, 49th in women ages 18-44 without a routine checkup in the past two years, 47th in adults with medical debt, and 46th in adults with age-appropriate flu and pneumonia vaccines.

Then there is the matter of finances. A Texas A&M study found that Texas is turning down as much as $5.4 billion a year by rejecting Medicaid expansion. The Perryman Group, a respected economic research organization, estimates that for every $1 Texas spends to expand Medicaid, $1.78 will come back in revenue, with most of it going to local governments. Currently, the uninsured often defer getting care until an emergency-room visit is unavoidable, with hospital districts, and ultimately taxpayers, picking up the tab. In the last decade, 21 rural hospitals closed in Texas, more than any other state. Increased Medicaid funding will improve their viability.

Opponents of expansion make a number of arguments—Washington could stop picking up 90% of the cost, and not all doctors accept Medicaid patients are examples—but their case is about as persuasive as Vladimir Putin’s justification of the invasion of Ukraine. In defending his opposition to expansion, Gov. Greg Abbott offered this non sequitur in 2022: “The best way to get health care insurance is through an employer. Since I was re-elected [in 2018], Texas has added more jobs than any other state.” This is true enough, though largely beside the point for at least three reasons. First, less than half of the state’s private-sector firms offer health insurance; second, some people are not in the workforce for understandable reasons, such as caring for young children; and third, having a growing economy and extending insurance to all are not mutually exclusive. One would think that a state experiencing good times, such as one with a $33 billion budget surplus, would be able to find money to promote good health for people who fall through the cracks of insurance coverage.

Various observers, among them Ray Perryman, the Perryman Group’s CEO and president, say that the underlying reason why Abbott, Lt. Gov. Dan Patrick, and other Texas Republicans oppose Medicaid expansion is their antipathy toward Barack Obama and his administration’s signature achievement. When Abbott was attorney general, he said, “What I really do for fun is I go into the office [and] I sue the Obama administration.” Among his 31 lawsuits was one to invalidate the ACA after its passage in 2010. Thirteen years later, our bright-red neighbors Oklahoma and Arkansas have seen the humanitarian and economic benefits of expanding Medicaid. So did Indiana under then-Gov. Mike Pence. But Texas remains obstinate. Expansion takes a backseat to misguided consistency, if not downright spite. As The Dallas Morning News editorialized, “Our governor and our Legislature overlook all of this to stick it to a Democratic president who hasn’t been in office for six years.” (It is probably also relevant that the beneficiaries of expansion would disproportionately be people of color who are not part of the Republican electoral base and are highly unlikely to be Republican donors.)

The short-term outlook for Medicaid expansion remains dim. As long as Abbott and Patrick are in office, Republican legislators, even those who are privately sympathetic, are unlikely to endorse it. Looking down the road a few years, prospects are brighter. The national trend is encouraging. Commenting on North Carolina’s action, Lawrence O. Gostin, an expert on public health law at Georgetown University, said, “This is the beginning of the end of the Medicaid expansion story.” For some time after Social Security and Medicare were enacted, they remained subjects of intense criticism by Republicans. Eventually they became accepted features of American public policy. The same thing appears to be happening with the ACA. Republican 2024 presidential hopefuls are focusing on other matters.

In Texas, 69% of respondents in a 2020 poll supported Medicaid expansion. This year, the Legislature overwhelmingly passed a law, which was signed by the governor, extending Medicaid coverage for new mothers from 60 days to one year. This is especially important because half of the births in the state receive Medicaid funding. A change in framing may have been helpful in this action. As one North Carolina Republican legislator said, “I will never vote for Medicaid expansion, but I will vote to close the coverage gap.” It’s a distinction without a difference but a potentially consequential one for expansion advocates.