WESLACO, RGV – Hidalgo and Cameron County may lose approximately $50 million in federal funds if Texas fails to create a coverage plan for adults in or near the federal poverty income line by 2018.

The Texas Medicaid 1115 Transformation Waiver provides the state with about $4 billion in federal funds for hospital care to uninsured Texans and innovative care projects.

Patrick Bresette, Texas executive director of the Children’s Defense Fund (CDF), said Texas should be working on a solution to expand its Medicaid program.

“If we don’t come up with that, the whole array of programs that are funded by Medicaid would start to unravel. And so you have hundreds of millions of dollars in the Valley that would be lost,” Bresette said. “The flip side is if we can successfully in the next 15 months negotiate a plan with the federal government, you would see almost five times that money that you might’ve lost actually come back into the county. So it’s a dramatic switch depending what happens in the next 15 months.”

When the Affordable Healthcare Act, or Obamacare, was passed in 2010, it was designed to provide affordable coverage for adults above the poverty line. In 2012, the U.S. Supreme Court ruled that states could not have federal funds if the states failed to provide coverage to adults below the poverty line. According to Anne Dunkelberg, the associate director as well as health and wellness program director of the Center for Public Policy Priorities, this created what is called the Coverage Gap.

The coverage gap leaves people below the federal poverty line with no insurance, therefore Texas runs the risk of not receiving the renewal of the 1115 Waiver. Dunkelberg said there are two ways for states to close the coverage gap: Medicaid expansion or waivers with features like premiums, wellness incentives and a health savings account.

With the 1115 Waiver, hospitals and other providers can earn funds through an Uncompensated Care (UC) Pool and a Delivery System Reform Incentive Payment (DSRIP) Pool. If Texas was not granted the renewal of the waiver, the state will have a 25 percent loss from DSRIP and a loss of $4 billion. However, if Texas creates a successful coverage solution that reduces the number of uninsured people, then the state can bring in about $6 billion in net federal funds.

“Texas relies heavily on federal Medicaid funds to provide health care for residents of our state. Much of that funding (almost one quarter in 2016) comes through something called the Medicaid 1115
transformation waiver,” Dunkelberg wrote, in a recent report about the 1115 Waiver. “Texas, like several other states, sought the original five-year waiver to build health system capacity and to support innovations so that when more Texans gained health coverage in 2014 through both Medicaid Expansion and the new private insurance Marketplace under the Affordable Care Act (ACA), the health care system would be more efficient and better able to absorb new, formerly uninsured patients.”

Dunkelberg said federal Medicaid officials’ approval of Texas’ waiver in 2011 was also based on the assumption that Medicaid Expansion would happen in all 50 states. The 2012 U.S. Supreme Court ruling (NFIB v. Sibelius), Dunkelberg explained, gave states the option not to expand Medicaid, and Texas is one of 19 states that has yet to embrace covering most adults in and near poverty in the Medicaid program.

“Fast forward to May 2016, when federal Medicaid officials granted Texas a 15-month extension of the Medicaid waiver. The extension means Texas hospitals will continue to receive funding at current levels through the end of 2017. What happens after that has multi-billion dollar implications for Texas hospitals, county governments, and communities,” Dunkelberg wrote.

“Beyond the fiscal impact, Texas’ approach to modifying the waiver will also affect whether loved ones can continue to access local innovative care projects, and the future viability of our community and safety net hospitals.”

CDF’s Bresette spoke about the potential loss of funds for Texas and the Valley when he spoke at a recent Latino Summit hosted by the Texas Senate Hispanic Caucus. The event was held at South Texas College’s Mid-Valley campus in Weslaco.

“With this new deadline of 2018, no one can wait. So it’s now time to get real plans on the table, to have a real conversation and a real debate and it’s just not time to be quiet anymore,” Bresette said. “The numbers are stark and the kind of hits to the local and state budgets are too dramatic let alone the human lives we talked about today. … All of us as advocates and our supporters in the legislature are ready to be vocal.”

If by 2018, Texas is approved for the renewal of the 1115 Waiver, the state will gain significant federal funds as a result of their success with their Medicaid expansion. On a local scale, Hidalgo county may gain an estimated $405 million, Cameron county with $198 million and Willacy county with $12 million.

Editor’s Note: The main image accompanying this story shows Patrick Bresette, executive director of the Children’s Defense Fund. (Photo: RGG/Steve Taylor)