Interactive: Weighing Medicaid Expansion

Whether to expand Medicaid is the major health care question facing Texas legislators this session. Although Gov. Rick Perry has compared adding impoverished adults to the rolls of the state program to adding more people to the Titanic, Democrats and even some fiscal conservatives argue that expanding the program under the federal Affordable Care Act is a wise budgetary decision. The threat of the governor’s veto will make it difficult for advocates of expansion, but Democrats, some local government officials and some health care lobbyists are optimistic that lawmakers can find a route to expand Medicaid that circumvents the governor’s veto power.

This interactive breaks down the numbers behind some of the arguments for and against the Medicaid expansion. As they contemplate their decision, lawmakers will weigh factors including enrollment growth, costs and savings, and the effects on the rate of insured. 

Medicaid Enrollment Growth

This graph shows the change in Medicaid enrollment spurred by the Affordable Care Act, according to estimates by the Texas Health and Human Services Commission. Click on the legend to add or remove a group from view. For example, select "Baseline - Projected 2013 Enrollment" to see how the the number of enrollees covered by the expansion compares with the expected number of enrollees in 2013. 

The HHSC estimates 341,000 Texans would qualify for Medicaid under the expansion rules in 2014. And by 2016, more than 1 million Texans would be added to the program through the expansion. Additionally, 3.7 million Texans are expected to enroll in Medicaid in 2013; population growth and demographic changes will add 1.45 million eligible Texans to the program; and 402,000 Texans, mostly children, who already qualify for Medicaid are likely to be enrolled in response to the federal reforms. All tallied, Medicaid enrollment is estimated to surpass 6.6 million by 2016. 

In 2014, the federal mandate requiring all individuals to purchase health insurance will take effect. All signs indicate that the federal government will set up an online health insurance market — as Texas officials declined the offer to create it — to help uninsured Texans find subsidized health coverage. The ACA stipulates that individuals with an income at or below 133 percent of the federal poverty line could enroll in the state’s Medicaid program and individuals with income up to 400 percent of the federal poverty line could receive a tax subsidy to help them purchase private insurance through the exchange when the mandate took effect.

The U.S. Supreme Court’s June ruling did not overturn the individual mandate, but it gave states the ability to opt out of the Medicaid expansion.

The health insurance subsidies and the tax penalties for not purchasing insurance are determined on a sliding scale based on annual income. If Texas does not expand Medicaid, a family of four with an income at 133 percent of the federal poverty line — $29,725 per year — could either pay $595 for coverage and receive a tax subsidy to cover the rest of the payment or pay a tax penalty of $285.  

Spending and Savings

The federal government would cover the majority of Medicaid expansion costs, but Texas would still foot a portion of the bill. Click on the legend to change the view on the graph and more closely discern the projected trends in federal and state spending, according to estimates by the HHSC. 

The federal government would pick up the tab for the entirety of the expansion enrollees’ health care costs from 2014 to 2016. The federal financing would be reduced slightly each year after that, but would not fall below 90 percent. Most of the state’s costs — particularly in the first few years — would be administrative spending necessitated by the increased enrollment.

The Medicaid expansion is only a fraction of the costs the state will incur as a result of the ACA. Texas anticipates spending an additional $1.1 billion from 2013 to 2017 on mandated increases to provider reimbursement rates and additional Medicaid enrollment resulting from the individual mandate.

All combined — the increasing costs of the existing Medicaid program, the potential Medicaid expansion and other costs incurred by the ACA — the HHSC estimates that Texas would spend $68 billion on Medicaid from 2013 to 2017, while the federal government would spend $1.2 trillion.

Some economists argue the state would save more money in other areas than it would spend directly on expanding Medicaid. Ray Perryman, a Waco-based economist, released a report in October arguing that the state would create $1.29 in economic stimulus for every $1 spent on the Medicaid expansion in the first 10 years. In total, savings on uncompensated care costs and improved patient health would generate $270 billion in real gross product and 3.1 million person-years of employment over 10 years, according to the Perryman Group’s estimates.

Effect on the Rate of Insured Texans

Texas has the highest rate of uninsured in the nation, according to the U.S. Census Bureau, with nearly a quarter of the population — 5.8 million Texans — lacking health care coverage. This pie chart shows the current makeup of Texas’ health insurance market using data from the U.S. census’ current population survey. Click on the “insured” section of the pie to see the percentage of individuals with private coverage, government coverage or both in 2011. (Insurance coverage fluctuates, and there’s some overlap in individuals with private and public coverage throughout the year.) Or click on the “uninsured” section to see estimates extrapolated from the survey by the HHSC on the percentage of uninsured Texans who would be eligible — or ineligible — for subsidies, Medicaid or Medicaid under the expansion in 2014.

A report by demographers at the Hobby Center for the Study of Texas at Rice University estimated that as many as 4.4 million of the 5.8 million Texans without insurance in 2010 could have insurance by 2014, depending on how federal health care reforms are implemented. This interactive shows the demographics of the uninsured and the Hobby Center’s estimates on how the federal reforms could affect the rate of uninsured by county. The graph below compares estimates by the Hobby Center, the Health and Human Services Commission and the Congressional Budget Office on the effect of the Affordable Care Act’s policies on the rate of uninsured adults in 2014.

Editor's note: This article contains a correction regarding the total spending on Medicaid from 2013 to 2017 by the state and federal government. Texas would spend $68 billion on Medicaid from 2013 to 2017, while the federal government would spend $1.2 trillion.

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