Despite opposition from conservative Republicans, the House Appropriations Committee on Tuesday advanced a proposal that would reform Medicaid by allowing the state to request a block grant from the federal government and expand coverage to low-income Texans.

“This is not an expansion of Medicaid — this is the creation of a new program that leverages our private sector,” said Rep. John Zerwas, R-Simonton, the author of House Bill 3791. Members of Appropriations voted 15 to 9 to move the legislation out of committee and continue debate on the House floor.

Opponents said the bill had moved too fast without appropriate vetting. 

“I want to have further conversation in the Appropriations Committee before voting out such an important piece of legislation,” said Rep. Stefani Carter, R-Dallas. 

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The revised bill has four parts: It outlines what the block grant would 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.

The conservative Texas Public Policy Foundation had a strong hand in helping craft the language of the block grant proposal, which would request that the state be allowed to implement sliding scale subsidies for Medicaid recipients to purchase private health coverage. Such a block grant would require an OK from the Obama administration, which political observers believe is unlikely. 

John Davidson, a health policy analyst at TPPF, said the language in HB 3791 “that deals with the block grant to reform the current Medicaid program is language that we have been promoting,” but the organization does not support the committee substitute the House panel approved.

“The problem with the bill is that it goes beyond reforming the current Medicaid program to include the Affordable Care Act Medicaid expansion population,” said Davidson, “which we believe is fiscally irresponsible and an unwise policy course for the state.”

Rather than expand Medicaid as directed under the Affordable Care Act, under Zerwas’ proposal, Texas would leverage tax revenue collected from premiums on health care plans to pay for the state’s portion of the program’s costs. It would also allow the state to save money by tailoring Medicaid recipients’ benefits, implementing “personal responsibility” cost-sharing measures such as co-pays and deductibles, and prioritizing premium assistance for private market health plans.

Texas has the highest rate of uninsured in the nation — roughly a quarter of the population lacks health insurance. Although Gov. Rick Perry and other conservative leaders in the state oppose the implementation of federal health reform, local governments, hospital and health care associations and other advocacy groups argue the economic and social benefits of expanding Medicaid outweigh the political opposition to it. 

HB 3791 "takes steps to reduce uncompensated care while also engaging the private market to provide insurance products to an underserved part of the state’s population," John Hawkins, senior vice president of advocacy and public policy for the Texas Hospital Association, said in a statement. "When all is said and done, the bill will reduce the state’s uninsured rate, which impacts all Texans.”

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