Could Texas Follow in Florida's Footsteps?

Governor Rick Perry offers words of advice to new and veteran House members during a speech on the opening of the 83rd Legislative Session on January 8, 2013
Governor Rick Perry offers words of advice to new and veteran House members during a speech on the opening of the 83rd Legislative Session on January 8, 2013

When Florida Gov. Rick Scott reversed his stance on Medicaid expansion this week, many Texas policymakers were left wondering: If Florida can reach a deal with the feds, could Texas?

The Florida compromise hinged on the federal government’s agreement to approve Scott’s initiative to privatize Florida’s Medicaid program statewide. Texas is one step ahead of Florida in that is has already received federal approval and privatized Medicaid statewide.

Although the Florida plan doesn't directly apply to Texas, Gov. Rick Perry — like Scott — won’t agree to expand Medicaid without a compelling political compromise from the federal government. And what Texas wants is flexibility, preferably in the form of a block grant, to contain Medicaid costs and improve access to care.

“What we can do and what we should do on the state level is push for statutory reform of the Medicaid program and use that to leverage Washington,” said John Davidson, a health policy analyst with the conservative Texas Public Policy Foundation. Rather than expand Medicaid, he said, Texas should approve measures to implement sliding scale co-pays and move to a defined contribution system for long-term care to minimize costs.

“It would be a lot more politically thorny for them to do that,” he said, but it would encourage the federal government to consider “the need for states to have flexibility to reform those programs in a way that works for the recipients and provides good value.”

In the 2011 session, Texas lawmakers anticipated saving $3.1 billion with a variety of Medicaid cost containment measures, many of which depended on federal approval. The state came up $1.2 billion short of that goal, partially because of an optimistic timeline for the implementation of managed care statewide, but primarily because the state stopped pursuing $700 million in anticipated savings because it was clear the measures they'd proposed — changing eligibility standards and implementing reasonable co-pays — would not receive congressional approval.

There's only a slim chance the federal government would approve a block grant waiver, said Kim Ross, a health policy consultant and former head lobbyist for the Texas Medical Association. But the structure of the Medicaid waiver the federal government approved — which allowed Texas to privatize Medicaid and set up standards for federal and local government entities to finance innovation in health care delivery models — indicates the federal government is willing to work with the state to reward health care innovations to control costs, he said.

“The big play is Medicaid expansion combined with Medicaid redesign to make sure you’re actually going to get better value out of that investment,” Ross said.

Despite Perry’s consistent reluctance to expand Medicaid, there is movement among a handful of Texas Republicans to accept its inevitability. By spending $15 billion, Texas could receive $100 billion in federal dollars over 10 years that could potentially finance additional innovation in health care delivery and reduce trips to high-cost hospital emergency rooms.

Health policy experts and politicians on both sides of the political aisle argue Texas could get a lot of bang for those bucks, while still taking actions that minimize the political damage and financial burden on the state.

Like Scott, for example, Texas could agreed to only expand Medicaid for three years, during which time the federal government would cover all of the new enrollees’ health care costs. Or the state could follow Arizona Gov. Jan Brewer’s example by including a severability clause that would end the Medicaid expansion if the federal government reduced its financial share of the program’s costs.

“The ACA's Medicaid expansion offers Texas a once-in-a-generation opportunity to design and test — at federal expense — new models for health care delivery that are cheaper, quicker, and more accessible,” Bill Sage, vice provost of health affairs in the law school at the University of Texas-Austin, said in an email. “If the state moves strategically in this direction, it may discover that the techniques and structures it develops for Medicaid beneficiaries are so efficient and effective that they are adopted by and for the general population.”