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Texas Politicians And Businesses Feud Over Medicaid Expansion

While governor of Texas, Rick Perry refused to accept federal funds to expand Medicaid.
Rick Wilking
While governor of Texas, Rick Perry refused to accept federal funds to expand Medicaid.

Dallas's Parkland Hospital treats a lot of people without health insurance. On a November day in 1963, emergency room doctors at this county hospital frantically tried to save an American president who could not be saved. These days, emergency room doctors frantically try to treat 240,000 patients every year.

"So you can see we have every treatment area filled up. Beds are in the hallways and the rooms are all full," says Dr. John Pease, chief of emergency services.

In Texas, about 1 in 4 people is uninsured. By federal law, the county hospital's emergency room cannot turn sick patients away, no matter their ability to pay, so Parkland opens its arms.

Last year it cost Parkland Hospital three quarters of a billion dollars to provide what is called "uncompensated care" — mostly treating patients without health insurance. Parkland is hardly some 90-pound weakling, but $765 million of red ink will strain any hospital. Dallas County Judge Clay Jenkins, who oversees the county hospital, says it doesn't have to be this way.

"A huge chunk of that could be paid for," Jenkins says. "It's about $580 million a year that would be brought in by the Medicaid expansion monies."

Expanding Medicaid was intended to be a key element of the Affordable Care Act. Medicaid expansion covers uninsured adults, mostly working poor, who don't make enough to buy health insurance on the exchanges. Twenty-nine states and the District of Columbia have taken up the charge of Medicaid expansion. But when the U.S. Supreme Court gave the individual states the option to opt of Medicaid expansion, then-Texas-Gov. Rick Perry could not opt out fast enough.

Texas hospitals had to eat $5.5 billion in uncompensated care last year. The reason is this: After the Affordable Care Act passed, the amount of money the federal government provides to hospitals for uncompensated care was significantly reduced.

In 2013, while contemplating a second run at the presidency, Perry had a message for Tea Party conservatives across the nation.

"Thank you all for being here," he started. "The first day of April. Seems to me an appropriate April Fool's Day — makes it perfect to discuss something as foolish as Medicaid expansion and to remind everyone that Texas will not be held hostage by the Obama administration's attempt to force us into this fool's errand of adding more than a million Texans to a broken system."

Perry's speech was a clear message to the Republican-dominated state Legislature: Medicaid expansion is part of Obamacare, and Texas hates Obamacare. The problem is that in hating the Affordable Care Act, the state is leaving on the table as much as $100 billion of federal money over 10 years — money that could pay for health insurance for more than 1 million of its working poor.

This is driving many in the state's business community bonkers.

"It's our money that we are sending to Washington, D.C.," says Bill Hammond, CEO of the Texas Association of Business, which includes many of the state's richest and most powerful business owners. "We are not getting it back," he says. "We pay for it with corporate income tax, we pay for it with our personal income tax and we pay it in the fact that our premiums are higher than they would be if everyone was insured."

Texas has the second-highest health insurance premiums in the country, right behind Florida. And Texas has the third-highest property taxes in the country. In Dallas, for example, more than half of property owners' county property tax bill goes to reimburse Parkland Hospital for the uncompensated care it has to provide.

"Texas businesses pay almost 63 percent of all state and local taxes," Hammond says.

He says if the state expanded Medicaid it would save Texas business billions of dollars a year that could be invested in upgrading equipment, hiring new employees, providing raises and rewarding shareholders.

For every dollar the state would pay into Medicaid expansion, it would earn back $1.30 from the economic activity created, according to an analysisby Ray Perryman. He's an economist who has consulted for the Texas Legislature and six governors. That economic activity would top out at $3 billion in 10 years, creating 300,000 new jobs each year, he says.

"It's infused in some areas that have direct impact on the economy in a lot of fundamental ways that extends beyond the year in which it occurs," Perryman explains. "You may be prolonging someone's work life 10 or 15 years, or maybe solving a chronic illness problem that's going to drain hundreds of thousands of dollars from the system over time that's avoidable if people get health care earlier."

Totally aside from the health benefits, Perryman says, when you look at the numbers, "You look at them and you say, 'This is a no-brainer. We need to be doing this.' It's really an apolitical situation. It's just math."

But it's much more than just the math. As the 84th session of the Texas Legislature comes to a close, there's been no debate at all about Medicaid expansion. The issue seems to be settled and the answer is an unqualified no.

"We've got a very conservative Legislature which would like to prioritize tax relief over meeting some of the infrastructure needs of the state," says John Hawkins, a vice president with the Texas Hospital Association.

Hawkins says the state's uncompensated bills cost everybody. The hospitals can't eat that kind of loss, so they shift some of that cost to their insured patients. "Probably $1,800 of the family premium each year can be attributable to the cost of the uninsured in the state," he says.

It's fair to say that Texas Republicans are not big on entitlements. Nevertheless, $100 billion is a lot of money to turn your back on.

Republican Rep. John Zerwas is himself an anesthesiologist who represents a conservative suburb southwest of Houston. Like all his Republican colleagues in the Texas House and Senate, Zerwas opposes the Affordable Care Act. Nevertheless, he's trying to find a way for Texas to take the Medicaid expansion money by reclassifying it as something else, like a federal block grant or something other mechanism — anything that's not called Obamacare.

"I try to argue that when you look at where those monies are invested and how that translates into job growth and economic growth, the health care sector is a very good place for that investment to be made," Zerwas says.

But some very politically powerful people in Texas don't believe it.

"Expanding government programs doesn't create jobs," says John Davidson, director of the health care policy center at the Texas Public Policy Foundationin Austin, a conservative think tank. "The government can't create jobs. So it's fundamentally flawed from an economic point of view."

Davidson and the Texas Public Policy Foundation not only say no to Obama's Medicaid expansion, they want the administration to give Texas more control over regular Medicaid so the state can toughen standards.

"Personal responsibility, work requirements, narrower benefits, penalizing inappropriate use of the ER," Davidson says. "These [are the] kinds of things that we and other conservative groups wanted to bring into the Medicaid program to try to incentivize certain behaviors on the part of the patients."

This is precisely the position the new Texas governor, lieutenant governor and Texas Senate have taken. And Republicans in the Texas House and Senate who are open to Medicaid expansion fear if they support it, it will earn them the wrath of Texas Tea Party Republicans. Zerwas says he hears this a lot.

"Generally the issue comes as politically, how is this going to affect me in my next election?" Zerwas says. "Anything that is seen to be taking advantage of a provision in the health care law is going to be seen as something that's propping up Obamacare."

Political districts in Texas are now so heavily gerrymandered and turnout so low that Tea Party voters can have outsized influence. Last election, for example, more than a half-dozen Republican incumbents in the Texas House were beaten because they were deemed not conservative enough. For now, Medicaid expansion in Texas is dead. But if Texas won't consider taking the money, other states will. A growing number of Republican legislatures — Arkansas, Arizona, North Dakota and Montana — recently voted to accept Medicaid expansion money. Utah, Florida and Alaska are discussing it.

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Wade Goodwyn is an NPR National Desk Correspondent covering Texas and the surrounding states.