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John Davidson: Texas Can't Afford to Expand Overburdened Medicaid System

Commentary

This article originally appeared in the El Paso Times on 2/10/2013.

Recently, the Texas Medical Association announced its support for Medicaid expansion under Obamacare, with an important caveat: Expansion must be accompanied by fundamental reform.

It is a caveat that will never come to pass—so long as Washington, D.C., and not Texas, is calling the shots.

The TMA's insistence on reform underscores the one big truth about Medicaid that expansion will only make worse: It is a broken system that is failing the very people it is meant to serve.

Ever since the U.S. Su preme Court ruled that the federal government could not force states to expand their Medicaid programs to cover non-disabled, low-income adults, states have been debating whether to expand voluntarily. Texas Gov. Rick Perry reaffirmed his firm opposition to Medicaid expansion in his State of the State address, rightly saying that Texas cannot afford to expand an overburdened system.

Lost amid the wrangling is the uncomfortable reality that Medicaid enrollees receive inferior health care with very limited access to providers. Currently, only three out of 10 Texas physicians will accept new Medicaid patients. The result is that Medicaid patients are 50 to 100 percent more likely than those on private insurance to use hospital emergency rooms for routine care.

The reason for the physician shortage is that Medicaid pays providers about half of what private insurance pays. Thanks to onerous federal rules and regulations, cutting payment rates is one of the only tools states have at their disposal to control costs.

Every biennium, Medicaid takes up a larger share of the state budget, and it now accounts for more than a quarter of all state spending.

Throwing more money and people into the system will not fix Medicaid's endemic problems, nor will it provide adequate care for those forced into the program. Expansion, in the current context, is a sign of intellectual exhaustion on the part of Washington, whose micromanagement of Medicaid helped create the current mess.

Texas can and must do better for its citizens.

The solution to our Medicaid problem will not come from Washington; it will come from the Lone Star State. Texans, not federal bureaucrats, are in the best position to take care of the state's poor and disabled.

The TMA is wrong about expansion, but right to urge lawmakers to, "look beyond the federal government expansion solution and design a solution that works for Texas and for Texans."

The best solution would be a Medicaid system that gave enrollees the chance to purchase private health insurance along with everyone else.

Instead of maintaining a bifurcated system in which Medicaid enrollees are treated differently than those with private insurance—with benefits the government mandates for them but inadequate access to doctors to provide those benefits—Texas could use Medicaid funds to subsidize beneficiaries directly on a sliding scale based on income.

Such a reform would require a block grant of federal Medicaid funds, which would stabilize the program's budget and give enrollees more control over their own care.

Mandating Medicaid expansion is just one example of how the federal health care law seeks to take flexibility from states and choice from individuals in favor of a centralized bureaucracy in Washington.

Even the TMA, who members stand to benefit from expansion in the short term, recognize that doubling down on a failing system result in worse access to care and greater budgetary problems in the state.

In the long term, Texas cannot afford expansion, and those who rely on Medicaid cannot afford for state lawmakers to go along with it.

John Davidson is a policy analyst for the Center for Health Care Policy with the Texas Public Policy Foundation.