Quick Update on the Texas Medicaid 1115 Waiver Renewal and the Health Care Coverage Gap

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The costs of Texas’ inaction—not moving ahead with a plan for health care coverage and accepting federal Medicaid Expansion funds available to our state—are mounting with the passage of time. Experts estimate Texas is currently losing around $6 billion a year in federal dollars for health care because we have not closed our Texas Coverage Gap. On top of that, our federal Medicaid 1115 waiver (a program that brings $4 billion each year in federal health dollars for hospital care for uninsured Texans and innovative care projects) is up for renewal, and the latest federal policy could reduce those 1115 dollars by as much a quarter (yes, that would be a loss of $1 billion each year). That’s all “real money,” and real Texans (over 750,000) are left without affordable health care in the Coverage Gap, so city and county officials, health care providers, business groups, and consumer advocates are all paying close attention to developments.

Some time has passed since officials discussed the Medicaid waiver at an Appropriations Committee hearing last May and public hearings around the state in July. To catch us up, here are 3 important developments.

#1: Texas filed a request (September 30) for a five-year extension of its Medicaid 1115 Transformation Waiver with federal Medicaid officials, who then took public comments through mid-November. Texas organizations and elected officials weighed in, most of them calling for Texas Medicaid to adopt a health care coverage plan for hard-working Texans in the Coverage Gap. Read more in our detailed analysis of the public comments.

#2: In late November, federal Medicaid officials requested that the Texas Health and Human Services Commission (HHSC) submit an independent analysis by May 31, 2016 of how much of Texas hospitals’ free care for the uninsured is offset by the waiver’s uncompensated care pool (which makes up half of the total waiver budget in 2016), and how much less uncompensated care would be needed if Texas expanded Medicaid. Read more.

#3: Texas Medicaid is now seeking approval from federal Medicaid officials of a “transition” period of one year (or, rumor has it, perhaps 15 to 18 months).

What does any of this mean for the Texas health care Coverage Gap and the Medicaid 1115 Waiver?

  1. Federal officials now know from public comments that Texas stakeholders value the Medicaid waiver’s reforms but also want a health care coverage solution and believe it will be more cost- and health-effective than back-end payments to hospitals for the uninsured.
  2. Federal and Texas Medicaid officials will commission a study of waiver spending and its impact on the safety net and Medicaid overall.
  3. There is a good chance that Texas could receive “status quo” funding amounts in fiscal year 2017 (the same amount as in 2016). But it is not safe to assume Texas will avoid future waiver funding reductions.

Read more on these updates here, and stay tuned to CPPP for more waiver updates: our next report will detail what future waiver funding reductions might look like around the state.

At the Center for Public Policy Priorities, we believe in a Texas that offers everyone the chance to compete and succeed in life. We envision a Texas where everyone is healthy, well-educated, and financially secure. We want the best Texas - a proud state that sets the bar nationally by expanding opportunity for all. CPPP is an independent public policy organization that uses data and analysis to advocate for solutions that enable Texans of all backgrounds to reach their full potential. We dare Texas to be the best state for hard-working people and their families.

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