His state is home to the highest percentage of uninsured Americans in the country, but Texas Gov. Rick Perry on Monday rejected the Medicaid expansion in President Obama’s health care law, saying it would be too expensive in the long run and give the federal government too much sway in state affairs.
Mr. Perry said Texas won’t set up an insurance exchange nor will it expand Medicaid eligibility to cover more beneficiaries, thus turning down billions of dollars of federal funding that the law’s proponents say would have cut the state’s uninsured rate in half.
He becomes the latest in what’s now at least a half-dozen Republican governors to swear off implementing major parts of the Affordable Care Act, after the U.S. Supreme Court said last month that states can opt out of the Medicaid expansion without losing out on their existing funding for the federal-state insurance program for the poor.
“I stand proudly with the growing chorus of governors who reject the Obamacare power grab,” Mr. Perry said. “Neither a ‘state’ exchange nor the expansion of Medicaid under this program would result in better ‘patient protection’ or in more ‘affordable care.’ They would only make Texas a mere appendage of the federal government when it comes to health care.”
States’ ability to bow out of the Medicaid expansion is threatening the health care law’s key goal: Extending coverage to most of the 50 million Americans who lack insurance. The Obama administration said it’s still optimistic that most of the states will eventually opt in, predicting the deal will eventually prove too good for them to turn down.
“Ultimately, we hope states will recognize that this is a good deal to cover more of their residents and pay their hospitals and doctors for their care,” one official said.
Besides Mr. Perry, the governors of Iowa, Florida, Louisiana, South Carolina and Wisconsin have said they won’t expand their programs, while a handful of other Republican governors say they’re still considering what to do.
State officials said Medicaid already accounts for a quarter of Texas’ budget, and that percentage is growing.
But analysts said Texas stood to gain more from the new health law than most states, because 1 in 4 of its residents lacks health coverage.
Starting in 2014, the state would qualify for $20 billion annually in new federal funding: $13 billion to pay for enrolling 2 million more Texans in Medicaid and another $7 billion to help low- and middle-income residents buy private coverage from an exchange.
In return, states would have to cover 10 percent of the Medicaid expansion by 2020. According to estimates by the Urban Institute, that means Texas would pocket $52.5 billion while paying out $2.6 billion in the first six years — a small price in light of the returns, proponents of the law say.
“The amount of money we’re talking about is less than our public hospitals are spending in one year on uncompensated care,” said Anne Dunkelberg, associate director of the Texas-based Center for Public Policy Priorities. She said that hospitals will continue passing the cost of uninsured patients on to patients with insurance. “It’s coming right out of local taxpayers’ pockets.”
Mr. Perry floated the idea of opting out of Medicaid entirely back in 2010. But he backed away from his suggestion after studies showed that it would leave 2.6 million Texans without health coverage — many of them poor children and pregnant women.
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