Robert Vick for TX-SD22 Robert Vick for TX-SD22

Robert Vick

for Texas Senate

The Challenge of Healthcare in Senate District 22 - Part 2

October 4, 2020

When we talk about healthcare in rural Texas, there are two problems that immediately come to the forefront. The first, and the most impactful to ALL rural Texans, is the closure of community hospitals and clinics. In the absence of consistent and stable financial underpinnings, healthcare facilities, generally among a community’s larger employers, live a hand-to-mouth existence. The percentage of low-income rural Texans compared to their better-off neighbors is higher in a rural community than what we find in the urban environments.

This means that rural facilities experience a higher percentage of “uncompensated care”, which reduces the profits that sustain the facilities. This puts not just jobs but local healthcare at risk. And once the facility closes, the providers such as doctors, nurses, physical therapists, surgeons, etc. move on, too.

The second problem affects us all as well, although some of those effects are hidden. Texans have more uninsured citizens than any other state, and we find the greatest percentage of those uninsured in our rural communities. Because they are uninsured they experience greater numbers of untreated chronic conditions.

By law Emergency Rooms must treat any person in, say, diabetic shock, but only to the point of saving their life and stabilizing them. They provide that uncompensated care and discharge the patient - who has no access to follow-up care, counseling, or maintenance medicines - until they have their next life-threatening occurrence. This uncompensated care is the obvious financial hit to the healthcare system, but the rest of the community takes a hidden financial hit too, in the form of higher medical charges, higher insurance deductibles, higher copays, and even higher local taxes.

But there is a solution - a means of providing an on-going financial base that lets healthcare facilities develop a sustainable budget, not dependent on an annual dogfight for state and county funds. And it doesn’t have to cost the local taxpayers a dime.

A part of each person’s Federal Income Tax is returned to the states through a 90/10 percent funding mechanism when a state expands Medicaid under the Affordable Care Act. The Federal government returns those income tax dollars to cover 90% of Medicaid bills while the state contributes 10%. But in actual practice, the state can use offsets to potentially zero out their contribution. However, since Texas has not expanded its Medicaid that portion of our income taxes is NOT returned to us, but rather used to fund those states that HAVE expanded Medicaid. Let’s bring that tax money back to Texas to help our own citizens.

Examples of the offsets available to reduce a state’s contributions include:

  • Some patients previously eligible under other Medicaid programs for special circumstances (like pregnant women or people who would otherwise need a disability determination) might enroll under the ACA expansion instead. This moves patients from traditional Medicaid which uses a 61/39 percent funding split to the expanded Medicaid which pays a 90/10 percent split, reducing costs to the state.
  • The state and local governments will require less spending on health care they previously self-funded that is now covered by Medicaid for enrollees, such as services for mental health and substance use treatment, certain corrections-related health care (in particular, hospital stays outside the correctional system), and provider subsidies for uncompensated care.
  • The increased federal spending brings additional revenue impacts as typically associated with increased economic activity (sometimes called stimulus or fiscal multiplier effects) and tax collections. The infusion of returned tax dollars spurs additional economic activity increasing sales tax revenues.

Recent estimates have taken into account potential offsets and multiplier effects for Texas, finding that the state match could be covered through such offsets on state-funded health programs. And this isn’t unusual. Reports from states that have expanded Medicaid, as well as new research, suggest that expansion under the ACA’s financing terms can occur with marginal state budget impact.

And note that Medicaid pays a higher per-bed rate than state and county indigent care provides, further improving facilities’ financial stability.

So how much money are we talking about? Below is a county-level table that identifies, by county, how many newly-eligible citizens are expected, how many of those will navigate the application process and enroll (it is common for up to 20% of eligible individuals to not enroll), the amount of Federal tax revenue returned to the county, and the state’s nominal share (before offsets).

And finally… Medicaid expansion addresses the actual health needs of millions of our fellow Texans. It will make our state healthier by providing on-going, regular treatment for chronic conditions such as diabetes, heart disease, or hypertension – all treatable conditions. We can make premature death from 19th century illnesses a thing of the past. Stable facilities remaining in our rural communities mean that your life-saving treatments are nearby. When a person suffers a heart attack or is seriously injured in an accident the first hour is called the “golden hour”. It is critical that the hospital or operating room is NOT an hour’s drive away. By preserving an economic base for our local healthcare facilities we save jobs in our community. It is well past time we expand Medicaid and keep our doctors and nurses in our (and their) communities.

Photo credits: State Map - Texas Democratic Party; Thumbnail - Enric Moreu @unsplash; Closed Hospital - Progresstexas.org; Dollars - Vladimir Solomyani @unsplash; Caregiver - National Cancer Institute