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PRESIDENT’S
MESSAGE

Texas and Medicaid

By Rodolfo “Rudy” Molina, MD, MACR, FACP, 2021 BCMS President

Medicaid was created in tandem with Medicare in 1965, designed revenue comes from supplemental pro-
to expand access to mainstream health care for low-income families grams provided by the 1115 waiver UC
and individuals. The federal government would partially fund this funds. The 1115 waiver was never meant to be a permanent solution
program which gave states considerable latitude designing their pro- and we must remember that UC funds do not cover the costs of care
grams. Consequently, states varied widely in their approach for pro- for uninsured patients outside of the hospital, nor do they offset physi-
viding health care to the poor and their families. Incremental changes cian charity care costs.
in Medicaid occurred over the ensuing decades, and in the 1990s, fur- Texas is one of 12 states that have opted not to expand Medicaid
ther changes were enacted with the passing of the Balanced Budget under the provision provided by the Affordable Care Act (ACA). In an
Act of 1997. The states were allowed to expand with the use of the attempt to incentivize states to participate in the expansion, the Amer-
Social Security Act’s Section 1115 research and demonstration waiver ican Rescue Plan Act of 2021 was passed. This will provide a temporary,
authority, which allowed the states to provide care to the uninsured two-year fiscal incentive for states to newly implement the ACA Med-
who were previously ineligible for Medicaid. Also created with this icaid expansion. Under the law, states that expand would be eligible for
Act was the Children’s Health Insurance Program (CHIP), which will a 5-percentage-point increase in the state’s regular, or traditional match
be discussed later in this article. rate for two years. Simply put, under the 5-percentage-point bump, the
new estimated federal funds would be more than two times larger than
First, we will look at some facts about Medicaid: the new state expansion costs.
1. 5.2 million Texans, 18.4% of the population, lacked insurance in A comprehensive literature review of Medicaid expansion showed
2020. the possibility of improved access to care and reduced uncompensated
2. The cost of Medicaid over the last 10 years is 40% of the state general care costs. Recent studies have shown an association between expansion
revenue funds at $65.3 billion, with 97% Medicaid and 3% CHIP. and gains in employment as well as growth in the labor market. Medi-
3. Trends in caseload and spending for major Medicaid client cate- caid expansion could also support mental health and substance abuse
gories have all increased. treatment for low-income people.
4. Texas leads the nation in the rate of uninsured children pre-pan- Presently, Medicaid and CHIP insure roughly 35% of all U.S. chil-
demic, so numbers were possibly higher in 2020. dren. As reported by Perrin, Kenney and Rosenbaum (NEJM Dec. 31,
5. Presently, Texas Medicaid is heavily depended on the 1115 waiver. 2020), apart from the elderly, no other age group depends more on pub-
6. Although Medicaid is called a federal-state partnership, most of the lic benefits. As stated by federal law, Medicaid funding is tied to state
policy-making authority lies within the federal government, whereas spending. Even though children are considered a low-cost population
the spending initiatives rest with the states. to insure over the last three decades, the number of children who receive
insurance from their parents’ jobs has steadily declined.
On April 16, 2021, the Biden administration stated it would not In my opinion, there are some inequities in the Medicaid program.
renew the 1115 waiver for the state of Texas and will therefore expire First, eligibility for children is tied to low income or disability, thereby
on September 30, 2022. Let’s spend some time explaining this waiver. serving the very poor. Second, funding is tied to state spending, targeting
In brief, the waiver is for the Healthcare Transformation and Quality children who have greater economic and health care needs which raises
Improvement Program. It is called the 1115 waiver, as Section 1115 of the costs to states. And third, the low physician payment rate, on average
the Social Security Act allows the federal government to approve waivers two thirds the rates paid by Medicare, reduces physician participation
for experimental, pilot or demonstration projects. It is an important and as a consequence, access to care.
funding source for the state’s hospitals and other health care providers. One could argue that there were some flaws in the creation of
The waiver, initially approved in December 2011 and renewed in De- Medicare and Medicaid from the beginning. It has placed the cost of
cember 2017, is currently a $25 billion program with costs shared be- medical care for low-income families and their children on the states.
tween federal and local governments. The waiver augments the state’s This issue could be seen as a national need. I would agree with Perrin
Medicaid managed care program and consists of two funding pools: a et.al., that “making Medicaid universal and federally funded would en-
program that pays hospitals for uncompensated care (UC) delivered to able states to focus on initiatives that improve health care quality as well
patients without insurance, and a program which provides funding for as those that enhance integration of health care, education, and social
innovative health care initiatives, Medicaid recipients, uninsured and services for all children.” Medicaid expansion could possibly help treat
low-income patients. Rural hospitals depend heavily on the 1115 Med- our most precious commodity, our legacy that is our children.
icaid waiver. For the average rural hospital, it provides about $2 million
a year in uncompensated care. The UC payments help cover most of Rodolfo “Rudy” Molina MD, MACR, FACP is the 2021 President of
these losses. It is estimated that more than one fourth of a rural hospital’s the Bexar County Medical Society.

8 SAN ANTONIO MEDICINE • August 2021