As the Medicaid expansion debate heats up this legislative session, it’s worth keeping in mind what Texas could expect from the federal government under any expansion scenario: exactly the same Medicaid program we have now, only with 1.5 million more people on the rolls.

Last month, the Centers for Medicare and Medicaid Services (CMS) posted a Frequently Asked Question (FAQ) page clarifying the agency’s position that Medicaid expansion will be all or nothing: “As stated in the past, the Affordable Care Act does not provide for a phased-in or partial expansion.”

Here in Texas, there’s been some speculation about pursuing a deal with CMS similar to the one Arkansas is reported to have reached, in which the expansion population would get private coverage through the health insurance exchange, paid for with Medicaid funds. Details about this scheme are still scarce, and Washington has not yet approved the Arkansas plan, but CMS cleared up some confusion about the extent to which Arkansas will actually be purchasing private insurance for the newly eligible population, instead of adding them to the Medicaid rolls:

 “Under all these arrangements, beneficiaries remain Medicaid beneficiaries and continue to be entitled to all benefits and cost-sharing protections. States must have mechanisms in place to ‘wrap-around’ private coverage to the extent that benefits are less and cost sharing requirements are greater than those in Medicaid. In addition under the statutory options in the individual market beneficiaries must be able to choose an alternative to private insurance to receive Medicaid benefits.”


Which is another way of saying that Arkansas’ Medicaid expansion will in fact add to the state’s Medicaid rolls, making no substantive changes to what is currently allowed in Medicaid through the Health Insurance Premium Payment (HIPP) program. Arkansas will have to pay for any benefits the private plans on the exchange do not offer-and that’s after using its federal expansion dollars to purchase more expensive coverage.

The Congressional Budget Office estimated that private coverage on the exchanges would be 50 percent more expensive than Medicaid coverage-an average of $9,000 per person on the exchange versus $6,000 per person enrolled in Medicaid, which means Arkansas’ expansion dollars won’t go as far and also that Arkansas will be on the hook for much more when the federal match rate for the expansion population starts to fall off in 2017.

The takeaway here is that Washington is not really cutting any “deals” with the states on Medicaid expansion. For Texas lawmakers, this means any expansion bills passed this session that require co-pays or deductibles on a sliding scale, or any “alternative” to Medicaid expansion, will be a non-starter for the feds.

The message from Washington remains what it has been throughout the various phases of ObamaCare implementation: states can go along with our plan or they can opt out, but there will be no negotiating.

In light of that fact, Texas leaders should continue to stand firm in their refusal to cave in on Medicaid expansion.