What's more important in Texas: politics or money?
When the U.S. Supreme Court upheld the Affordable Care Act last month, it also gave states the right to opt out of the expansion of Medicaid, the program that could provide healthcare for up to 2 million more low-income Texans, starting in 2014.
Republican governors from Florida and Louisiana quickly said they won't expand Medicaid, and others jumped in. Last week, The Hill reported that seven Republican governors have pledged to reject the expansion.
But Gov. Rick Perry, a constant critic of the healthcare reform law and President Barack Obama, hasn't taken a stand.
There's good reason to hesitate. Two years ago, Perry proposed abandoning Medicaid because its growth was straining the state budget. That led to a review that detailed the obvious: Losing Medicaid would be a financial and humanitarian disaster.
Medicaid pays for half of all births in the state and helps two-thirds of Texans in nursing homes. An estimated 2.6 million people would become uninsured, shifting costs to others.
Uncompensated care at Texas hospitals would increase $4 billion annually as former Medicaid patients seek treatment in emergency rooms. Families with insurance, already paying an estimated $1,551 extra to cover the uninsured, would face premium increases, so more would drop coverage.
"This feedback loop is not sustainable over the long term and ultimately could jeopardize the solvency of the insurance industry," the state report said.
Perry's trial balloon fell flat.
The expansion of Medicaid is different, in that the advantages haven't been ingrained in the political and economic system. But the cost-benefit analysis shakes out the same.
Texas stands to get a huge boost in funding, receiving at least 10 times more in federal dollars than it would pay for Medicaid in 2014-19. One state estimate says Texas would spend about $5 billion for the expansion and the feds would contribute $76 billion. A Kaiser Commission report estimates that Texas would spend $4.5 billion and the feds, $62 billion. Actual numbers will depend on how many enroll.
Insuring millions of residents would be a boon for healthcare jobs, too, and they've been powering the Texas economy. In the past 10 years, the state added almost half a million jobs in clinics, hospitals, doctor's offices and home health services, accounting for 36 percent of all nonfarm jobs created since 2002.
And here's the kicker on Medicaid expansion: Residents and businesses must pay federal taxes (and tax increases) to support the effort, whether Texas is in or out. The only question is whether the state gets back some of the money.
It would be nice if leaders were moved simply by the chance to improve the health of so many residents. Healthier Texans should be more productive Texans. And getting them into a healthcare system raises hopes that they'll find a medical home to replace emergency room care, which could slow the rise in health spending.
No state stands to benefit as much as Texas from the new Medicaid, because it has so many uninsured residents (more than 30 percent of working-age adults) and because eligibility is so limited.
To get Medicaid, Texas adults must be disabled, pregnant or caregivers, with an income limit of $18,312 for a family of three in 2010. Expansion would make all adults eligible if they earn up to 133 percent of the federal poverty level, or $25,390 for a family of three.
The catch is that states have to pay some of the costs of expansion -- a small portion, mind you, but in healthcare, the numbers add up fast. Texas Medicaid spending has already doubled in the past decade to $25 billion, and it accounts for about a quarter of the state budget.
Rising health costs are a factor, but the primary driver has been a 78 percent increase in enrollees. More than 1 in 6 Texans lives in poverty, and Medicaid covers about 4 million children, pregnant women and disabled adults.
One way or another, the state must help pay for their medical care, and under the expansion, a big chunk of the uninsured would join that group.
Medicaid, created in 1965 as part of the Great Society reforms, uses a cost-sharing formula with the states, based on per capita income. Texas' income is 5.5 percent lower than average, so it receives a larger federal share toward Medicaid -- almost 61 percent.
In the Children's Health Insurance Program, serving low-income kids, Texas has 72 percent paid by the feds. The Medicaid expansion calls for the federal contribution to be higher still. For three years, the feds would cover all the costs and then its share would drift down to 90 percent.
That sounds like a bargain, especially if Texas taxpayers are sending the money to Washington anyway. But it's not free. And some critics have called the plan a bait and switch, saying the feds are likely to cut their contribution sharply amid rising deficits.
That threat exists, but in 1999, CHIP opponents made the same argument. The Legislature passed CHIP after months of wrangling, Gov. George W. Bush signed it, and federal support has remained strong.
Perry won't have to decide on Medicaid until early next year, after the presidential election and the Lege convenes. But he could be in a delicate spot.
He's been attacking Obama and government expansion for three years, and that criticism was the most coherent plank in his failed bid for the presidency. He wrote an anti-Washington book, Fed Up, and rejected $555 million in unemployment insurance funds, saying the feds had too many strings attached.
Ditching Medicaid would be more painful and consequential, affecting many more residents and businesses. With so many federal dollars on the table, bet on money trumping politics again.