If Texas Caves On Medicaid, The War Against Obamacare May Be Over

When Texas Gov.-elect Greg Abbott (R) takes office Jan. 20, he will be poised to engineer a remarkable political turnabout on Obamacare that was unimaginable even a few months ago. As one of the attorneys general to lead the legal charge to kill Obamacare, Abbott would have been among the last people anyone would have expected to soften on Medicaid expansion. But in what is shaping up as a sort of Nixon-to-China moment, Democrats and health care providers now believe that the state’s prospects for Medicaid expansion under Obamacare are much improved.

Texas is the biggest “get” left for the program, which is expected to account for roughly half of the law’s health coverage expansion. More than 1 million people have been left without insurance under Obamacare because outgoing Gov. Rick Perry (R) refused to expand Medicaid. That would make it a huge coup for ACA supporters: Texas accounts for about one-fourth of the Medicaid coverage gap nationwide.

Abbott is a most unlikely source of hope for Obamacare proponents. As Texas attorney general, he joined with other attorneys general in the lawsuit that eventually led the Supreme Court in 2012 to give states the option of not expanding Medicaid under Obamacare. His public pronouncements haven’t differed much from his very conservative predecessor’s, but in private, expansion advocates have seen glimmers of hope. During a meeting with state legislators last month, the incoming governor said he would seek out more information about the Medicaid expansion plan that conservative Utah has been negotiating with the federal government. It’s a huge reversal, as Texas was one of the states that industry groups had more or less written off in late 2013, at least for the foreseeable future.

“For those who support the expansion of Medicaid, we’re encouraged that there’s an opening there to look at different models and maybe create a hybrid and see what works best for Texas,” Rep. Carol Alvarado, one of the Democrats who attended the meeting, told TPM.

While it’s not a sure thing that Texas will actually go through it, Abbott’s openness comes as deep-red states like Utah, Wyoming, and Tennessee are actively working with the federal government to craft their own alternative Medicaid expansion plans. And if the biggest Republican-controlled state, one that serves as something of a conservative bellwether, comes around on Medicaid expansion, it’s easy to imagine that more of the 20-odd holdouts would start to reconsider their position. There are already rumblings that Florida, the second-biggest holdout, is also more likely to expand this year.

“I still think (Texas) expanding is a long-shot, but clearly the governor recognizes the economic impact that expansion could have for residents and the healthcare industry in the state,” Caroline Pearson, vice president at Avalere Health, an independent consulting firm, told TPM in an email. “For other Republican governors, Texas would certainly be a bellwether, since the state has previously been one of the staunchest opponents of expansion.”

Other expansion advocates outside of government took news of Abbott’s curiosity about Utah’s plan as a sign of thawing. Abbott’s office did not respond to TPM’s request for comment.

“I was very pleased to see the report that he’s at least willing to meet and to discuss. I think that’s a big step forward,” Steve Love, president and CEO of the Dallas-Fort Worth Hospital Council, told TPM, contrasting Abbott’s inquiry with Perry’s position “that he wasn’t even going to discuss it or entertain any kind of coverage expansion.”

Even with that new openness, everybody agrees that straight Medicaid expansion is off the table — Love described it as a “non-starter.” The Texas Hospital Association has put together its own proposal, called the Texas Way, which sounds like a hodgepodge of proposals that other Republican-led states have put forward.

Medicaid dollars would pay for private coverage, a la Arkansas. Enrollees would be responsible for some small payments, as Indiana and Utah have proposed. It would provide incentives for small businesses to cover their employees, which is similar to a proposal by Tennessee. Love also floated a provision that would end the expansion if the federal government ever reneged on its funding pledge, like Arizona included in its legislation.

Ted Shaw, president and CEO of the Texas Hospital Association, told TPM that he met with Abbott during the gubernatorial campaign. Straight expansion was never raised during the meeting, Shaw said, but he isn’t surprised that Abbott is taking a look at an alternative.

“I think he’s at least willing to listen to something about private insurance,” he said. “I find him to be a very intellectually curious individual. He wants to gather all the data he can.”

While Abbott’s interest is a big step, Shaw also noted that 25 new legislators would be sworn into office this year and securing their support will be equally important in actually passing a Medicaid expansion plan. Love said that he had met with more than 30 lawmakers over the last 30 days and believes that the interest is there. Texas has the highest uninsured rate in the country, at about 22 percent, and would bring in more than $60 billion in federal funding over the next 10 years by expanding Medicaid in some form.

The Texas Association of Business, as well as most major local chambers of commerce and health care providers, have endorsed Medicaid expansion. That is the pitch that Love, Shaw and Alvarado are hoping, paired with Abbott’s new interest, will achieve what a year ago had been unthinkable.

“I’m an optimist. I think people will realize that this is an opportunity for Texas to do the right thing for those that can’t,” Shaw said. “There’s a lot of education to do. The next 45 days is very critical in looking at what opportunity we have.”