Business Association Endorses Zerwas' Medicaid Plan

The Texas Association of Business — a heavyweight in conservative lobbying circles — has endorsed state Rep. John Zerwas’ proposal to negotiate with the federal government to find a palatable way to expand health insurance coverage to low-income adults.

“If we can take the money on our terms and conditions then it is something we ought to do,” said Bill Hammond, president of the group, whose board voted in January to oppose expanding Medicaid as called for under the federal Affordable Care Act. The basis of Zerwas’ plan is to negotiate a deal that allows the state to use federal Medicaid expansion dollars to subsidize private coverage, which Hammond said is a workable solution. “We encourage them to march to Washington to try to cut a deal,” he said. 

House Bill 3791, authored by Zerwas, R-Simonton, has four parts: It outlines what the state's request for a federal block grant to reform the current Medicaid program could look like; identifies Medicaid reforms that Texas could implement already, such as cost-sharing requirements and co-payments; sets up a separate program to potentially draw down federal financing to help individuals at or below 133 percent of the poverty level find private market coverage; and sets up an oversight committee for both programs.

“This is not an expansion of Medicaid — this is the creation of a new program that leverages our private sector,” Zerwas told the House Appropriations Committee, which voted 15 to 9 on Tuesday to move the legislation out of committee and continue debate on the House floor.

Although supporters of Zerwas’ proposal argue the conservative tides may be shifting in their favor, Gov. Rick Perry and many Republicans remain unwavering in their opposition to drawing down federal funds to expand coverage. 

“As he has said, reforming the current Medicaid system to better serve our most needy should be the priority,” Josh Havens, a Perry spokesman, wrote in an email. “Additionally, Gov. Perry has been clear that any draw-down of federal funding provided by the ACA will result in expanding Medicaid and, as you know, he does not support expansion.”

In a close vote on Monday — 77 to 68 — the House approved a non-binding motion directing its budget conferees not to agree to any measures that would allow Texas to expand Medicaid coverage.

Hammond suggested that the closeness of that vote in the House — coupled with the movement of HB 3791 out of the Appropriations Committee — “point to the fact that there is movement on the issue.”

But other conservative advocacy groups, such as the Texas Public Policy Foundation, remain vocally opposed to Zerwas’ proposal.

House Bill 3791 “contains a lot of good conservative, market-based principles for how to reform government-sponsored health care,” said John Davidson, a health policy analyst at TPPF. “But we have to draw a line at Medicaid expansion, because we think it puts Texas on a path that will be very quickly unsustainable.”

Davidson said the requirements outlined in Zerwas' proposal for a private-market solution to Medicaid reform are “either vague, not defined, meaningless or already allowed,” and added that accepting federal dollars to expand coverage would put Texas on the hook for an ever-increasing amount of money. He said TPPF would only support Zerwas’ proposal if it were amended to only include a request for a block grant to reform the current Medicaid program.

Supporters of expanding Medicaid have argued that refusing to expand coverage could cost Texas businesses more than $300 million a year, as many employers will be required to pay additional penalties for workers who do not have employer-provided health insurance, according to a report by Jackson Hewitt Tax Service.

Representatives for the TPPF and the Texas Hospital Association (THA), a supporter of Zerwas’ proposal, both argued their case to the board of the business association in January.

“There’s still a lot of misinformation out there,” said John Hawkins, senior vice president of advocacy and public policy for the THA. He argued that Zerwas’ proposal for a private market solution to expand coverage is unlike traditional entitlement programs. And he emphasized that medical providers and hospitals are already paying to finance an expansion of public coverage through rate cuts and new revenue sources.

“This is not Medicaid,” he said, “it’s a private market solution that has personal responsibility.”