Texas Sidestep Exposes Medicaid Rhetoric

John Commins, for HealthLeaders Media;

For obvious reasons many of us at HealthLeaders Media avoid writing about the politics of healthcare reform.

For one thing, there exist already hundreds of media outlets dedicated to the highly divisive topic, which often attracts commentary from the tinfoil hat brigades. More importantly, however, the politics of healthcare reform are ultimately beside the point.

People in the healthcare sector and the occasionally candid politician understand that healthcare reform is driven foremost by money and not politics or ideology. That is why the issue will still be with us regardless of which party occupies the White House or runs Congress next year.

There are legitimate disagreements on how to pay for healthcare, how to “bend the cost curve” and the extent to which the government should be involved. However, it is generally accepted that the current pace of healthcare spending, which will soon represent 20% of the nation’s gross domestic product, is unsustainable.

With that in mind, it was interesting to read a Washington Post article this week detailing the efforts of some Texas counties to do an end-run around Gov. Rick Perry’s adamant opposition to the Medicaid expansion in the Patient Protection and Affordable Care Act. It provides a wonderful example of rhetoric crashing against reality.

The governor’s rejection of Medicaid funding imperils billions of dollars for the state’s healthcare infrastructure at a time of severe budget constraints for the state and local governments. By some estimates Texas would draw down $164 billion from the federal government over the first 10 years of the expansion, at a cost of $27 billion in state dollars.

Perry, an unsuccessful presidential contender, is one of at least six governors who have vowed to reject Medicaid expansion money. They are playing politics with an economic reality that goes beyond party affiliation and ideology.

In a July 9 letter to Health and Human Services Secretary Kathleen Sebelius, Perry said he stood “proudly with the growing chorus of governors who reject the PPACA power grab. Thank God and our nation’s founders that we have the right to do so.”

“Through its proposed expansion of Medicaid, the PPACA would simply enlarge a broken system that is already financially unsustainable,” Perry told Sebelius. “Medicaid is a system of inflexible mandates, one-size fits-all requirements, and wasteful, bureaucratic inefficiencies. Expanding it as the PPACA provides would only exacerbate the failure of the current system, and would threaten even Texas with financial ruin.”

Census Bureau SAHIE Map Tool

Census Bureau SAHIE Map Tool

The lambasting of the Medicaid expansion comes from the governor of a state that already operates one of the nation’s most restrictive Medicaid programs. As a result, the U.S. Census Bureau reports that 26.3% of Texas residents were uninsured in 2009, the highest rate in the nation.

Instead of expanding Medicaid, Perry and other governors have called for block grants of federal money so that states can decide for themselves the best way to provide coverage for the uninsured.

With the state government opposed to expanding the Medicaid rolls, the burden of providing for the uninsured in Texas, as in many states, falls upon counties and municipalities. Those local officials who are already facing tight budgets are understandably not so eager to reject the federal government’s offer to pay for 100% of the Medicaid expansion in the first three years and for 90% of the expansion beyond 2020.

In addition, hospital executives, who often carry political clout in the state legislature as the largest employers in their districts, have already started to push back against Perry’s pronouncement.

Texas Hospital Association Executive Director Dan Stultz said in prepared remarks that the state’s hospitals “recognize there are concerns with expanding the Medicaid population, but given the state’s high number of uninsured, all options for gaining insurance coverage must be closely considered. Without the Medicaid expansion, many will remain uninsured, shifting costs to the insured and increasing uncompensated care to health-care providers.”

Most tellingly, on the same day that Gov. Perry issued his broadside to Secretary Sebelius, WellPoint Inc. announced that it was spending $4.9 billion to acquire Amerigroup Inc. which describes itself as “dedicated to the Medicaid, SCHIP, SSI and Medicare programs in the State of Texas” and in 12 other states.

“The acquisition of Amerigroup expands our scale and further diversifies our business mix by deepening our investment in the high growth Medicaid marketplace. It also increases our flexibility to serve customers across the economic spectrum,” Wayne S. DeVeydt, executive vice president/CFO of WellPoint said at the time. “We believe the acquisition is not only strategically important, significantly enhancing our future revenue and EPS growth opportunities, but will also provide an attractive return for our shareholders.”

Clearly WellPoint is anticipating an expanded Medicaid population.

Once again, the point here is not to disregard legitimate concerns and arguments about the scope and role of government in healthcare.

It is instead to make the point that responsible leaders can do so without firing election-year broadsides against programs that affect the fiscal health of their cities and counties, and the physical health of millions of their most vulnerable constituents.

How will this play out? I suspect that after the Nov. 6 election, there is a good chance that many of fiercest critics of the Medicaid expansion in Texas and other states will quietly drop their objections.  After all, this isn’t about politics. It’s about money.

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