Texas Medicaid Expansion Battle: Gov. Abbott Slams Federal Officials For Tying Hospital Funding To Federal Agency's Growth

Texas is newly embroiled in a battle with the federal government over critical healthcare funding, as the state staunchly refuses to expand its Medicaid program while federal officials threaten to tie funding for Texas hospitals to that very expansion.

In this conflict, billions of dollars in funding are at stake for Texas, which since 2011 has received about $6 billion every year from the federal government to cover uncompensated care (such as when hospitals go unpaid because patients can’t afford to pay for care) as well as a fund for programs to expand care for low-income residents. The funding is slated to end September 2016, but the clock is ticking because Texas's 2015 legislative session, which would be the state’s last opportunity to renew this funding, ends June 1, the Texas Tribune reported.

If Texas were to lose those federal dollars, it "would be a disaster," Dr. Paul Klotman, the president and CEO of Baylor College of Medicine in Houston, told the Houston Chronicle.

Last week, the Centers for Medicare and Medicaid, a federal agency, called Texas health officials to tell them that if the state wanted to continue receiving this $6 billion in annual funding, it would need to expand Medicaid, a government-funded health insurance program for low-income residents. Under the Affordable Care Act, the landmark 2010 legislation that overhauled the U.S. health care system, states were required to expand Medicaid eligibility. Then, in 2012, the Supreme Court ruled that states could not be required to expand Medicaid, although they still had the option of doing so if they wanted.

The Texas legislature has indicated it is against expanding Medicaid, with the Senate and House passing legislation in 2013 to prevent that from happening -- a sentiment that appears to still be in effect. In Texas, 1.1 million people could qualify for health insurance under an expanded version of Medicaid.

“The Supreme Court made it very clear that the Constitution does not allow the federal government to use these coercive tactics against the States,” Texas Governor Greg Abbott, a Republican, said in a statement Monday. “Medicaid expansion is wrong for Texas,” he added.

Ironically, Texas’s refusal to expand Medicaid has made this funding all the more crucial. Without the money from the federal government, the most vulnerable Texans would be the ones to suffer, John McWhorter, the president of Baylor University Medical Center in Dallas, told Modern Healthcare. The showdown between Texas and federal officials is similar to an ongoing battle between the federal government and Florida, which is also facing funding cuts for low-income hospital programs if it doesn’t expand Medicaid. Last week, Florida Gov. Rick Scott said he would sue the Obama administration for threatening to tie funding to the expansion of Medicaid in Florida.