AUSTIN – The Texas Public Policy Foundation today released a paper by Center for Health Care Policy Director John Davidson and Center for Fiscal Policy Economist Dr. Vance Ginn outlining a model to reform Medicaid. The paper, The Texas Medicaid Reform Model: A Market-Driven, Patient-Centered Approach, presents a framework to address Medicaid’s structural problems while obtaining greater flexibility from the federal government.

“The Texas Medicaid program is gradually taking over the state budget,” said Davidson. “If lawmakers don't get serious about how to reform Medicaid from top to bottom, the program will soon overwhelm other budget priorities.

"One way to gain control of Medicaid spending would be to subsidize private insurance for some Medicaid eligibility groups. Eligible enrollees would choose a plan that fits their needs and receive a fixed contribution of Medicaid funds to help pay the premium. Any cost beyond the subsidy would be their responsibility.

"We modeled what it would cost to do this for only pregnant women, children, and adults without a disability. Texas could save about $4 billion a year under such a plan compared to state agency forecasts. The savings would mount over time and reach $6 billion by 2023.

"Medicaid reform is coming one way or another. Texas lawmakers should make plans for major structural reform if and when the federal government allows the state greater flexibility over the program."

“We find that our patient-centered, market-based reform to Medicaid would save the state billions of dollars compared with the Health and Human Services Commission’s projected costs,” said Ginn. “After this reform, patients will be in the driver’s seat of their healthcare with greater access to care and better health outcomes. For Texans who have few other options and taxpayers who may soon face higher taxes to pay for unsustainable Medicaid expenditures, the time for Texas legislators to consider alternatives is now.”

To read the full paper, please visit:

John Davidson is Director of the Center for Health Care Policy at the Texas Public Policy Foundation.
Vance Ginn, Ph.D. is an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation. 

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.

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