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What Perry's Stance on Medicaid Expansion Means to Texas Hospitals

 |  By Margaret@example.com  
   July 11, 2012

So far, a handful of Republican governors have announced via various media outlets their intention not to have their states participate in the Medicaid expansion program that is part of the Patient Protection and Affordable Care Act.

I tried to find out if any of these governors actually contacted the federal Department of Health and Human Services to officially opt out of the Medicaid program, but received no responses. It ends up that PPACA doesn't have a statutory deadline related to the Medicaid expansion so no official word is necessary.

That didn't stop Gov. Rick Perry (R-TX) from dashing off a letter on Monday to HHS Secretary Kathleen Sebelius explaining that he stands "proudly with the growing chorus of governors who reject the PPACA power grab….Neither a state exchange nor the expansion of Medicaid under the Orwellian named PPACA would result in better patient protection or in more affordable care."

He asked the secretary to let President Obama know that "I oppose both the expansion of Medicaid….and the creation of a so called state insurance exchange because both represent brazen intrusions into the sovereignty of our state." As he notes as the end of the letter, expanding Medicaid "would threaten even Texas with financial ruin."

I laughed out loud the first time I read Perry's letter. It seemed calculated to appeal to the anti-big government crowd. But as I write this, I wonder if Perry didn't make a brilliant political move.

Is Secretary Sebelius really going shrug her shoulders and let Texas off the Medicaid hook? Is Perry really going to walk away from an estimated $70 billion in federal money? It's doubtful.

With 6.2 million uninsured individuals in Texas, the state has some clout in terms of negotiating with the federal government. In his letter, Perry says he "looks forward to implementing healthcare solutions that are right for the people of Texas" and asks Sebelius to support him in that effort.

On the flip side, Perry and the Texas legislature face a $6 billion shortfall in the state's current Medicaid program. That bill comes due in 2013. The legislature has never been shy about reducing Medicaid benefits. Only pregnant women, children, and disabled adults quality for the program now, so there's not much that can be cut there.

Texas just trimmed physician reimbursements by 2%, which reduced the number of physicians willing to take on new Medicaid patients.

Remember, the PPACA goal is to get more people under the insurance umbrella. A little give and take could be all the Perry needs to jump into the Medicaid expansion fold.

The press release announcing Gov. Perry's position on Medicaid expansion provided some clues into the system he would like to see implemented in Texas. It would have reasonable benefits tailored to individual needs and stress personal accountability. It would also allow copayments or cost sharing.

In my conversations with stakeholder groups in Texas it's apparent that they are disappointed in Gov. Perry's stand on the Medicaid expansion. The lack of a state-run health insurance exchange is not quite as pressing of a problem because the federal government will step in to develop and run the online market for health insurance.

But the statistics are compelling. About 20% of the state's adults live in poverty; 17% of children and 33% of adults are uninsured.  The uninsured turn to the hospital emergency department for their healthcare needs. Their expenses are shouldered by others in the form of higher insurance premiums and higher taxes.

In a statement, Parkland Health & Hospital System in Dallas noted that in 2011 it provided $605 million in uncompensated care. "Those patients will still need healthcare and they will still come to safety net hospitals like Parkland for treatment. If our state is going to turn away hundreds of millions in federal funds, we are eager to see what our leaders will propose to replace them."

Steve Love, CEO of the Dallas-Fort Worth Hospital Council, which represents 75 hospitals, noted that Perry's actions are a double whammy to hospitals, which as part of the PPACA negotiations agreed to cuts in their DSH or disproportionate share hospital payments in exchange for an expanded Medicaid program.

Hospitals now face having fewer resources to offset the costs of uncompensated care.

Love sees the Medicaid expansion with its federal backing as a way for Texas to get a sustainable Medicaid plan in place. "It gives us time to plan."

For now Michael Speer, MD, president of the Texas Medical Association, holds out hope that the Medicaid expansion will progress along the same lines as the federal CHIP (Children's health Insurance Plan) did when it was first introduced. "A lot of states said no at first but then they began to see the results. Within a few years every state was participating."

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Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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