HHS, Texas reach deal that delays Medicaid debate

The Obama administration and Texas have reached an agreement to extend a temporary program that helps the state’s poor access healthcare, postponing a contentious debate over ObamaCare’s Medicaid expansion. 

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The deal between the federal Centers for Medicare and Medicaid Services (CMS) and Texas continues for another 15 months an “uncompensated care” program that gives billions of dollars in federal funding to help hospitals in the state care for the uninsured. 

The Obama administration has raised the possibility of reducing this funding so that it does not cover care that would be covered if the state expanded Medicaid. That is, the administration says giving people insurance in the first place through Medicaid is a better system than reimbursing hospitals for caring for uninsured people. 

But the Republican-led Texas government opposes expanding Medicaid. If the “uncompensated care” funding had been cut without an expansion of Medicaid, it could have led to harmful cuts in care.

The deal reached Monday postpones the debate over expanding Medicaid by continuing the full uncompensated care funding for another 15 months. 

Such a debate could have been contentious. Florida’s Republican governor, Rick Scott, last year sued the Obama administration after it sought to limit uncompensated care funding in that state, arguing that it was an attempt to coerce the state to expand Medicaid (a claim that the Obama administration strongly denied.)

John Hawkins, senior vice president of government relations at the Texas Hospital Association, noted that the Texas legislature won’t be in session, allowing it to even consider Medicaid expansion, until January 2017. 

“There wasn’t really an advantage for either side to try to create leverage [on this],” he said, adding that both sides agreed not to “blow up” the uncompensated care funding, leading to potentially harmful cuts, over the Medicaid expansion issue. 

CMS says that the extension is to give more time for a study to be completed that will in part assess the effects of Medicaid expansion on uncompensated care. 

The administration warns that if no alternative agreement can be reached over the next 15 months, then the cuts to uncompensated care funding will go into effect. 

However, a new administration will be in place in Washington in 2017, meaning that future decisions on the program are uncertain. 

“It certainly has the effect of passing on the final negotiations to the next administration,” said Anne Dunkelberg, a health expert at the Center for Public Policy Priorities in Texas. But she said  she thinks the motivation for the extension of the uncompensated care funding is to avoid the “massive damage to Texas’s federal safety net if it just fell off a cliff.”