After Barack Obama won his first term, Rick Perry responded with Fed Up!, the anti-Washington rant that gave him a national profile as a pistol-packing defender of statesâ rights and coyote-menaced dogsâand briefly made him a contender for Obamaâs job. Now that Obama has four more years, Perry can get to work on a sequel, both to the book and to his White House run. The presidentâs reelection, however, poses challenges to Texas and its longest-serving governor that will require more than shoot-from-the-hip rhetoric. We face a historic choice in our relationship with Washington, one that will test the proposition that a great and powerful state can build its future on an inflexible antigovernment ideology. Maybe the title for Perryâs sequel should offer a bit of self-help advice for himself and our redder-than-ever state: Wise Up!
The single most consequential decision confronting Perry and Texas is whether to accept the expansion of Medicaidâthe federal-state partnership that provides health insurance for poor children and long-term care for the disabled and elderlyâmandated by Obamaâs 2010 Affordable Care Act (a.k.a. Obamacare). When that choice was left to the statesâ discretion by last summerâs landmark Supreme Court ruling upholding most of the ACA, Perry promptly fired off a letter to the U.S. Department of Health and Human Services denouncing the Medicaid expansion as a federal âpower grabâ that âwould only exacerbate the failure of the current system, and would threaten even Texas with financial ruin.â
By anybodyâs measure, Medicaid is government at its biggest and costliest. From the programâs relatively modest origins in Lyndon B. Johnsonâs Great Society, Medicaid has mushroomed to become the second-largest line item in our state budget (behind only Kâ12 education), with Texas now kicking in roughly $11 billion annually, while our federal taxes provide the $15 billion Washington antes up. Medicaid covers one in eight Texans at costs lower than private insurance, and without it our chart-topping percentage of the uninsuredânearly 25 percent of Texans lack insuranceâwould increase to more than 33 percent of the population, including the millions of children who make up the majority of Texas Medicaid enrollees.
Red-state governors have long chafed at their ever-increasing contribution to Medicaid, and the Supreme Court ruling seemed to offer them a lifeline out of a yawning fiscal abyss. But Medicaid already had an opt-out option; any state can say âAdiĂłs, mofoâ to the program at any time. Though seldom mentioned by the ranting right, this escape clause hasnât escaped Texas lawmakers, who in 2009 passed a bill directing Texasâs Health and Human Services Commission (presided over by Perry, who appoints its commissioner) to report on the economics of a Medicaid opt out.
And itâs exactly the arguments that Perryâs HHSC made that the governor will have to overcome if he decides to reject Obamaâs Medicaid expansion. The HHSC concluded that if we dropped out of Medicaid entirely, Texans would forfeit the billions in federal tax dollars weâre paying into the program. But weâll give away considerably more if we refuse the expansion, which would be fully funded by the federal government for the first three years, with the federal share gradually slipping to 90 percent by 2020. That means Texas would leave on the table $76 billion in federal spending during the first five years of the program, all of it paid for by our own taxes.
Then there are Texasâs hard-pressed public and nonprofit hospitals, which, as the HHSC noted, would lose billions annually in a full Medicaid opt-out. This is because of the Emergency Medical Treatment and Active Labor Act, the 1986 federal law requiring participating hospitals to provide care to anybody who shows up at an emergency room with an emergency condition, regardless of ability to pay. Far from being a shibboleth for liberal do-gooders, EMTALA has become a sentimental favorite of Republican politicians from George W. Bush to Mitt Romney to senator-elect Ted Cruz, who almost ritualistically inform us that every American has guaranteed health care because we can always go to the emergency room.
Notwithstanding Cruzâs jaw-dropping claim that itâs cheaper for the state to have uninsured Texans receive their primary care in the emergency room than in a doctorâs office, EMTALA costs Texas hospitals about $5 billion annually in actual out-of-pocket costs for services worth $15 billion in the health care marketplaceâlosses these hospitals believe will be substantially reduced when the Medicaid expansion cuts the number of uninsured Texans in half. Right now the whopping bill is passed on to all of us in the form of higher local property taxes, higher insurance premiums, and higher federal taxes, because Washington reimburses Texas hospitals for much of their EMTALA costs every year. Unlike Cruz, Perry knows that relying on this so-called uncompensated care as a social safety net is an expensive folly. The marquee item in the governorâs 2007 State of the State address was his own health plan, which ârecognizes the long-term benefits of providing Texans with preventative care through insurance instead of paying for costly emergency room visits.â
In that same speech, Perry drew a bead on the problem that Obamaâs Medicaid expansion would most effectively address. As Perry noted, millions of Texasâs uninsured âare working Texans whose jobs offer health care benefits they canât afford or no benefits at all.â The ACA would extend coverage to many of these families, probably helping Texas more than any other state.Â
Of course, Perry will protest that he could do a better job for these families with the no-strings Medicaid âblock grantâ heâd have gotten from Mitt Romney. But even if Perry had offered more than fuzzy math to explain how heâd provide coverage under his 2007 plan, total state-level control is no longer an option. Instead, Perry needs to step up for the millions of Texas workers for whom, to cite him again, âyears of hard work and savings can be wiped out with the onset of one life-threatening illness.â Perryâs HHSC has actually been willing to request waivers from the Obama administration that would allow Medicaid to be tailored to Texas, and heâll be under considerable pressure from Texas businesses to cash those big Obamacare checks and try to change Medicaid from within.
Perry has previously shown an ability to bow to political realitiesâi.e., demonstrated a willingness to heed his big donorsâon immigration, where his position has put him far to his partyâs left. Before the Medicaid expansion spigot turns on a little more than a year from now, Perry will again have an opportunity to put Texas businesses and workers ahead of ideology. If he does, his long tenure may well be remembered as the stable foundation for a Texas century. If he doesnât, heâll have written the final installment of his long-winded government-service saga even before the 2016 primaries begin: Washed Up!
Read a response to this column by John Daniel Davidson, a health care policy analyst with the Texas Public Policy Foundation.
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