On Friday evening, Dan Patrick’s office sent an announcement: on March 2nd the lieutenant governor, along with Senator Charles Schwertner and “other senators”, would hold a press conference on the subject of Medicaid flexibility. The topic was an intriguing one. Texas, of course, is one of the states that has declined to expand Medicaid under the provisions of the Affordable Care Act. Efforts to consider the subject, in 2013, were unceremoniously squashed, and nothing has happened in the interim that would make Texas more receptive to the federal government’s preferences. Schwertner, who chairs the Senate Health and Human Services committee, dismissed the idea bluntly months ago: “expanding Medicaid in its current form is a nonstarter for Texas.” Plus the date, March 2nd, was a dead giveaway.
The press conference confirmed the Senate’s position: Texas will not expand Medicaid in its current form. The idea of doing so, Schwertner added, “is simply not worth discussing.” And if the president doesn’t like that, apparently, it’s incumbent on him to be flexible. Patrick and Schwertner produced a letter to Barack Obama, signed by all 20 Senate Republicans, laying out their list of demands. They want the federal government to give Texas the latitude to implement ten reforms (“at minimum”) in the current Medicaid program, then, and only then, Texas would come back to the table—maybe.
It was an aggressive approach, considering that the Texas Senate can’t force the federal government to accept its conditions; but a defensible one.
The Senate’s reasoning, as laid out in the letter, is straightforward enough. Medicaid spending has ballooned since the 1980s; between 2000 and 2012, adjusted for inflation, it has roughly doubled. This year, it accounts for 29% of Texas’s all-funds spending. And Medicaid enrollment is expected to grow, whether or not Texas loosens the eligibility requirements by taking the expansion as offered. “This trajectory is clearly unsustainable,” wrote the senators.
And you know what? They’re right. Jane Nelson, chair of the Senate Finance Committee, had made a similar point about half an hour before the press conference began, and I paraphrased it on Twitter because as simple as it is, I think it’s the key consideration in any discussion of Medicaid expansion: soaring Medicaid costs are a threat to everything else in the budget. And I was exasperated when Eva DeLuna, a budget analyst at the Center for Public Policy Priorities, responded with a tweet disagreeing. “When did that happen?” she asked, attaching a chart of Texas’s Medicaid spending per-recipient since 2000.
This struck me, fairly or not, as an example of an ominous trend I’ve noticed among Democrats in the Obamacare era: incipient math denialism. I have no doubt the intentions are honorable, but come on now: Projections about the growth of entitlement spending are at least as clear as projections about anthropogenic climate change. Subsidies do not lower the actual market cost of health insurance; if they did, middle-income households wouldn’t need the subsidies. And if we’re talking about soaring Medicaid costs in Texas that are threatening other government services, we’re talking about overall spending, not per-recipient spending, obviously.
Here’s why growth in Texas’s total annual Medicaid spending is a problem. Even though the federal government puts up about 60% of the money, the state puts up 40%. Even today, 40% of $50 billion is a lot of money. Going forward, if the rate of growth of Medicaid spending exceeds the rate of growth in Texas revenues—as it is already projected to do, without Medicaid expansion—there are only two ways the state can pay for the program. And since Texas probably isn’t going to raise taxes, no one should call for Medicaid expansion unless they’re willing to explain why they’re willing to gut public schools, because that’s effectively what they’re proposing to do.
To DeLuna’s point, it’s true that Texas’s annual Medicaid spending per recipient has not soared; the growth in Medicaid spending is due to enrollment growth. This doesn’t mean that the Republican senators are wrong, though. It actually reinforces the argument they make in the letter. They’re asking the federal government for more flexibility in managing the program. Some of the reforms proposed, such as asset testing, would restrict eligibility and therefore limit enrollment growth. Others, like co-pays, are designed to improve efficiency. The per-recipient spending figures gives the argument credibility: Texas has made an effort to make Medicaid spending more efficient already, with measurable success, even under the current parameters.
The federal authorities may be wary of Texas’s motives here; it has in the past. And as mentioned, the Texas Senate doesn’t have much real leverage here. It’s risky to issue an ultimatum under those conditions. The fact that they did so reflects an important piece of context: because of its sheer size, Texas is in a relatively good negotiating position. There are so many people in Texas—and specifically, so many uninsured people, and so many who would be eligible for Medicaid if the program is expanded—that the Obama administration has a real incentive to be flexible, if not for Texas’s sake, then for its own. This was true in 2013 and the stakes are even higher now. The Affordable Care Act has been implemented and is being judged on its results. With this state in the mix, the judgment would be more favorable. Happy Texas Independence Day.