Back of Envelope Analysis of Texas Medicaid Expansion in House Reform Bill

The House Reform bill, HR 3962 would expand Medicaid coverage to 150% of the federal poverty income level.  Kids aged 18 and younger at or below 150% FPL already qualify for Medicaid or CHIP in Texas, but very few adults qualify, so the impact here will be among uninsured adults. 

This Medicaid expansion would not start until 2013 under the House bill, but to give you a general idea of what it could mean for Texas, here is an illustration based on current census data and Medicaid costs.  According to the latest US census data, in 2008 there were about 1.3 million uninsured Texas adults aged 19-64 who (a) are U.S. citizens and (b) have incomes below 150% FPL.  At the 2009 cost-per-Medicaid-parent of about $305 per adult/per month, providing coverage to 1.3 million more adults would result in about $4.7 billion in new health care spending.  Under HR 3962, the federal government would pay 100% of the costs of this coverage for two years, and 91% after that.  So in year 3, Texas’ 9% state share of the $4.7 billion would be would be about $421 million, with the federal government paying the remaining $4.25 billion. In  other words, about ten federal dollars in for every one state dollar. 

Of course, more sophisticated models will be developed going forward that figure in population growth, inflation, and “take-up” rates.  But this illustration is a reminder that the expansion, while not “free” for Texas, will yield substantial economic benefits.  HR 3962 will also fund increases in certain Medicaid primary care fees for providers on the same terms:  2 years at 100% federal and 91% federal thereafter.  States’ economies will also benefit from federal premium assistance and out-of-pocket cost help to families from 150-400% FPL, which will not require any state budget contribution at all.