Senator Bob Deuell

January 30, 2013

Deuell Responds to Hamilton Analysis of Medicaid Expansion

The Billy Hamilton analysis of Medicaid expansion done for Methodist Health Care Ministries and Texas Impact presents an incomplete view of possible financial effects of expanding the Medicaid program as prescribed by the Affordable Care Act.

While I do not dispute the numbers regarding the cost to the state and the federal government for the expansion, I do question Mr. Hamilton's conclusions of the positive benefits regarding savings, increased tax revenue, effects on the economy, and job creation. Mr. Hamilton, who has my utmost respect, does not mention the negative consequences of Medicaid expansion. While some will couch the decision not to expand Medicaid as political, such an expansion is not good public policy.

Many people who would be eligible for Medicaid under the expansion already have health insurance and would, of course, leave their employer-based insurance to enroll in Medicaid. The net effect, in addition to an unnecessary increase in cost to the Medicaid program, would be to shrink the existing private health insurance pool and in turn raise premiums for those left in that system. This will cause some businesses or individual employees to drop their insurance and hence create a new class of uninsured. It will also start the cascade for the unstated goal of the ACA to have a single payer government health care system.

Also not mentioned is that the federal government cannot afford to pay for the expansion of Medicaid. With 16 trillion dollars in debt and over 100 trillion more in projected unmet obligations for Medicaid, Medicare, and Social Security, how can we in good conscience put the federal government more in debt even if those in Washington are willing to do so?

One has only to be a casual student of history, economics, and public policy to know that at some point the federal government will indeed withdraw the generous monetary match. Yes, we can put a stipulation in to retrench the expansion when that happens, but can anyone imagine the reality of immediately taking Medicaid from over a million people who have come to depend on that government system rather than private enterprise? It simply would not happen.

Mr. Hamilton mentions tax revenue increases. Do we really want to expand a government program in order to collect more taxes? Regardless, is it good public policy to justify such an expansion by saying the taxes collected will pay for it? Collecting more tax revenue from the expansion of Medicaid has the effect of taxing tax money.

Money for uncompensated care comes from a combination of general taxation of income and other revenue at the federal level, taxation of sales, business activity, and property tax at the state and local level, cost shifting, and charitable donations of time and money.

Health care costs, billings, and financings are distorted and illogical. It is rare for charges for medical care to reflect the actual cost of that care. It is rare for an individual to pay for health care directly or in proportion to that actual cost. Consider also the complexity of taxation and budgets at the local, state, and federal level. It is unreasonable to think that any savings, reimbursements, or new income would be segregated or tangible enough to refund monies either back to the state government or to the taxpayers in the form of reduced property tax or other tax refund.

In addition, Medicaid has serious access and cost issues. Is it reasonable to put more patients in that system before changes are made? Many people with Medicaid do not have access to health care. Many people without insurance do.

The solution for Texas and other states is to embrace a state version of the Patient's Choice Act (PCA) filed in Washington by Senators Richard Burr and Tom Coburn and Representatives Paul Ryan and Devin Nunes in 2009. The PCA is a comprehensive bill addressing choice, prevention, an insurance exchange that is flexible and patient friendly, and malpractice resolution.

This bill recognizes the inequity of the federal tax system of subsidizing health care for higher income workers by allowing health insurance expenses to be tax deductible. The bill allows a tax rebate of $2300 for individuals and $5700 for families to be used for health care in the private sector. The money planned for Medicaid expansion could be given to the states for a state version of the Patient's Choice Act. This is in essence what we in the Texas Legislature, Chairwoman Jane Nelson, Lt. Gov. Dewhurst and Gov. Perry have been advocating in the form of a Block Grant. Given the estimated 1.3 million who would be eligible for Medicaid under the expansion, this would represent less government spending, tax fairness, and would provide health care for low-income Texans and put them in a better system.

Sen. Robert F. Deuell, M.D. represents Texas Senate District Two, and is a practicing family physician in Greenville, Texas.