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Advocates Say White House Decision To Rescind Medicaid Deal Could Lead To Talks On Texas' Uninsured Rate

The deal, which was fast-tracked during the waning days of the Trump administration, skipped the public notice period. Now, stakeholders will have a chance to weigh in on the application.

By Ashley Lopez, KUT

Health care advocates in Texas say they see an opportunity to address the state’s rising uninsured rate after the Biden administration announced last week that it is rescinding a health care deal the Trump administration cut with Texas.

The 10-year extension of the state’s Medicaid waiver would have provided federal funds to help pay for the cost of hospital care for uninsured Texans through 2032. In a letter to the state’s Medicaid director, federal health officials said Texas hadn’t followed public notice rules when applying for the waiver.

“Upon further review, we have determined that [Centers for Medicare and Medicaid Services] materially erred in granting Texas’s request for an exemption from the normal public notice process,” the officials wrote. They said the state didn't show an emergency existed to allow it to deviate from the normal process.

Gov. Greg Abbott accused the administration of “obstructing healthcare access for vulnerable Texans and taking away crucial resources for rural hospitals” in the state.

“The State of Texas spent months negotiating this agreement with the federal government to ensure vital funds for hospitals, nursing homes, and mental health resources for Texans who are uninsured,” Abbott said in a statement Friday. “With this action, the Biden administration is deliberately betraying Texans who depend on the resources made possible through this waiver.”

But health care advocates said the deal made during the waning days of the Trump administration was out of the ordinary and raised concerns.

For one thing, state officials initially applied for a five-year waiver to cover the costs of uninsured people, commonly referred to as uncompensated care costs. These waivers allow states to receive Medicaid funding for health care outside of how the program traditionally operates. In this case, the Trump administration agreed to give Texas an extra five years – 10 years total — to use Medicaid funds to shore up hospital costs for this care.

Anne Dunkelberg, an associate director with the policy think tank Every Texan, said it’s unheard of for waivers to be granted for such a long time. She said when Biden took office, officials told Texas they were going to take a closer look at this fast-tracked deal.

“This process did skip the public notice and comment period that are not just some light guidance — they are in law and in federal regulation,” she said.

Basically, the Biden administration found state leaders skipped an important step for advocates and stakeholders to weigh in on this issue. Patrick Bresette, executive director of the Texas office of the Children’s Defense Fund, said that's not a minor thing.

“I mean this is the chance for all the stakeholders — the hospitals, people like us, people who are uninsured, clinics — everybody to weigh in and offer their opinion about what a best Medicaid program would be moving forward,” he said.

Dunkelberg said nothing has technically been taken away from Texas. The state was approved for a waiver several years ago that pays for uncompensated costs until September 2022, so hospitals aren't going to lose funding any time soon. And, she said, Texas can just go back and renegotiate.

“I think it is a little on the overly dramatic side to suggest that there is definitely going to be any kind of interruption, much less anything in the near term,” she said.

Advocates say this could open the door for a broader conversation about Texas’ climbing uninsured rate. The state has the highest number of people without health insurance in the country, as well as the highest rate of uninsured. However, instead of seeking ways to expand health care coverage to more people, Republican leaders have focused on bringing in federal funds to cover the costs incurred by hospitals when they treat these patients.

Bresette said the fact that Republican leaders have been largely ignoring the state’s health care coverage issues has been a mistake.

“It’s not good for the economy to have so many people who are uninsured who may lose time from work because they didn’t get the care they needed,” he said. “It’s expensive when people have to go to the emergency room and they are not insured. Those costs get passed down.”

And, Bresette said, expanding coverage would prevent many people from ending up in the hospital due to preventable medical issues that could have been dealt with by a primary care physician.

“Insurance is the key to getting health care and … getting those kinds of preventive and maintenance care covered,” he said. “And that makes a difference and not just for individuals, but for basically how the whole community functions.”

And advocates say Texas does have an option for dealing with this problem: expanding Medicaid.

Texas is one of only 12 states that has refused to expand Medicaid coverage to more low-income adults. Even though the state will always have uncompensated care costs, getting more people insured could make a big dent in bringing down those costs for hospitals.

State Sen. Nathan Johnson, a Democrat from Dallas, has been pushing for bipartisan approaches to expand coverage to Texans using Medicaid dollars, whether it’s a straight up expansion through the Affordable Care Act or thought one of these waiver programs.

“There’s definitely an acceptable — actually a very good — avenue available to the Legislature,” he said.

Johnson said the Biden administration’s decision could be a flashpoint in the ongoing fight over expanding Medicaid in the Texas Legislature.

“I do see some momentum,” he said. “I do see the conversation increasing. Once people get over the initial anger — the misplaced anger — at thinking that the federal government has taken money away from us, then we settle down and realize, ‘OK, let’s just reapply and this time do it right.’”

Johnson said that means Texas health officials could include expanding coverage when it reapplies for the waiver, which would make it all the more likely the Biden administration would cut it a good deal.

He said the federal government has long helped states with uncompensated care costs, but states should do what they can to bring down those costs.

Democratic Congressman Lloyd Doggett said the Biden administration is already doing a lot to make expanding Medicaid here an even better deal.

“The Biden administration advised Texas that it could gain another $3.9 billion over the next two years by expanding Medicaid coverage,” he said. “That would provide assistance to over 2 million of our uninsured neighbors in Texas.”

And like most advocates and Democrats in the state, Doggett said he hopes this situation eventually leads to some serious discussions, even though the politics are tough on this issue.

“I think it will encourage a conversation,” he said. “Overcoming the ideological blinders is a very difficult thing in this Legislature with a governor who is so concerned about political opponents from the far right.”

Doggett said if Texas misses this opportunity yet again to expand coverage, it could become harder to negotiate these deals to cover uninsured costs. He also said he’s going to consider proposing legislation in Congress to work around the state – which would make it easier for major cities like Houston, Dallas, San Antonio and Austin to work directly with the federal government to get people covered.