Texas will leave more than $76 billion from the federal government on the table if Gov. Rick Perry gets his wish and the state does not expand its Medicaid program or establish a health insurance exchange in accordance with the Patient Protection and Affordable Care Act.
But Perry said the two initiatives could bankrupt the state and called them "brazen intrusions to the sovereignty of our state," neither of which would result in better patient protection or more affordable care.
State and federal Republican officials praised his move, saying the legislation could eventually leave the state holding the bag for billions in additional spending.
But the hospital industry and patient-care advocates say taxpayers will have to continue footing the bill for uninsured people, who will seek medical care when they're the sickest and most expensive to treat.
The hospital industry in Texas, which has agreed to more than $14 billion in reimbursement reductions that accompany the federal law, is a big supporter of the legislation for many reasons, said Steve Love, president of the Dallas-Fort Worth hospital council.
Only about half the adult population in Texas receives health insurance through an employer, because many Texans work in industries such as food service, retail and agriculture that don't provide coverage, Love said.
About a fifth of adults ages 19 to 64 live in poverty, and the Medicaid expansion is intended to provide many of them with coverage, Love said. An additional 1.2 million Texans would be eligible for Medicaid in 2014 under the proposed expansion.
"From an industry perspective, we are disappointed that Texas Gov. Rick Perry announced that Texas will not expand Medicaid coverage or implement a state health insurance exchange," Love said. "Since we will not establish a state health insurance exchange, the federal government will create one for Texas. Millions of Texans who were eligible to gain coverage through the Medicaid expansion will now not qualify."
The federal government will cover the entire cost of the Medicaid expansion through 2016 and most of it until 2020, so initially, the bills at the state level will be limited, Love said.
Over time, he said, the state may be able to work on some of the problems and budget difficulties that present themselves while the law is being implemented and do a better job of caring for impoverished Texans.
"If we don't expand Medicaid and set up health insurance exchanges, the situation will not get any better," Love said.
But Perry wrote that the two provisions would make Texas an appendage of the federal government, giving Washington officials the final say as to which insurance plans could operate in Texas, what benefits those plans must provide, and what price controls and cost limits would apply.
"It leaves many questions to be answered later through future federal rulemaking," he wrote to Kathleen Sebelius, health and human services secretary.
Some of Perry's sharpest criticism was reserved for the provision that calls for expanding Medicaid, which he called a broken system that is already financially unsustainable.
"Medicaid is a system of inflexible mandates, one-size-fits-all requirements and wasteful, bureaucratic inefficiencies. Expanding it as the PPACA provides would only exacerbate the failure of the current system, and would threaten even Texas with financial ruin," Perry's letter says.
An increase in Texans who can take advantage of the Medicaid program may make little difference if the state can do little to reverse the tide of physicians unwilling to take new Medicaid recipients because of regulatory burdens, payment hassles and low pay to healthcare providers, officials with the Texas Medical Association said.
According to a survey by the Texas Medical Association released Monday, 52 percent of physicians in Tarrant County do not accept new Medicaid patients, and an additional 22 percent limit the number of new Medicaid patients they do accept. In 2010, about 48 percent did not accept new Medicaid patients and 21 percent limited the number they accepted, according to the association. Statewide, the number of physicians willing to take new Medicaid patients has decreased from 67 percent in 2000 to 31 percent, the survey says.
How physicians will ultimately come down on this law is not a given, association President Michael Speer said.
"Taken in the aggregate, many of the things that would protect patients are a good thing," Speer said of the healthcare law. "But we don't like the added bureaucracy, we don't like to ask, 'Mother, may I?' Mucking around in this economic jungle is not something we really want to do. What we really want to do is take care of patients."
Those who oppose the two provisions of the act should get ready for some pushback from those who support the law, said Erin Carlson, health policy professor at the University of North Texas Health Science Center at Fort Worth.
"All the key players were on board with the ACA," Carlson said. "The hospitals, the health insurance industry, the pharmacies, the pharmacists, the doctors all supported the law, so I should think the lobbying efforts should be extraordinary. I think there will be efforts that would come down to push this through."
The big losers in a decision to curtail Medicaid expansion in Texas are the taxpayers who pay for millions of dollars in uncompensated care charged to uninsured patients in hospital districts statewide, said Anne Dunkelberg of the Center for Public Policy Priorities in Austin.
Insured families in Texas pay an estimated $1,800 in additional premiums a year to cover unpaid bills of uninsured patients.
"A failure to expand Medicaid would leave the poorest Texans without any health insurance, and the state will miss out on $76.3 billion between 2014 and 2019," Dunkelberg said. "This is not a governor's decision. This is something that the entire Legislature should weigh in on. If voters feel that just voting is enough they are wrong. They have to be prepared to phone, e-mail, write and let their elected officials know what's on their mind when it comes to issues like this.
"What the governor is doing makes no sense at all," she said.
Republican state and federal officials said Perry is wise to be cautious.
"The landscape ahead is so uneven," said U.S. Rep. Michael Burgess, R-Lewisville, who is a physician. "There's a risk to taxpayers for him signing on and then eventually being left holding the bag when the federal government decides it has bitten off more than it can chew."
U.S. Sen. John Cornyn, R-Texas, echoed Burgess' thoughts.
"Obamacare has driven up insurance premiums for Texans and will cripple the state budget," Cornyn said. "Texas should fight tooth and nail to resist what amounts to an unprecedented expansion of federal power from this administration."
State Sen. Jane Nelson, R-Flower Mound, said she, too, is worried about the "devastating impact" the federal healthcare law could have on Texas' economy and healthcare system.
"Ultimately, the future of this law rests with the voters," said Nelson, chairwoman of the Senate Health and Human Services Committee. "The next Legislature will have the opportunity to weigh in on these issues once we have a clearer picture of what will happen on the federal level."
Democrats said Perry is protecting big-moneyed buddies at the expense of the poor.
"No person with a speck of intelligence would turn down billions in federal dollars that would be a boon to our economy and help Texans," said Rebecca Acuna, spokeswoman for the Texas Democratic Party. "But then again this is Rick Perry.
"Rick Perry's Texas solution is to let Texans stay ill and uninsured. That is not a healthcare plan," she said. "Once again Perry is putting partisan political pandering in front of the interests of Texas."
State Rep. Lon Burnam, D-Fort Worth, said Perry's rejection of this healthcare funding follows his rejection of millions of dollars for both unemployment benefits and education.
"The governor needs to explain why Texans must keep footing the bill for his ideological points," Burnam said. "Our schools, our hospitals and our unemployed need the help, even if he doesn't."
U.S. Rep. Lloyd Doggett, D-Austin, called Perry's decision "disgraceful."
"He is only trying to protect his big insurance buddies and deny millions of working Texans access to an insurance marketplace similar to the one through which he once obtained his own health insurance," he said.