“The Harris County Health System has to provide indigent health care—someone has to pay for these services. Right now, the private taxpayers are paying for it,” Emmett said. “If we had Medicaid expansion, that [Harris County health] tax bill could be reduced quite a bit. Unfortunately, the state leaders try to make it seem like part of the [Affordable Care Act]—it’s not.”
Essentially, Harris County taxpayers are contributing more than $600 million a year of local property taxes to provide indigent care, said Ken Janda, CEO of Community Health Choice, a nonprofit health plan which provides insurance to individuals across the Greater Houston area.
“That number could likely be cut in half if we did expand [Medicaid],” he said. “Therefore, we could lower property taxes or take those dollars and fill a few potholes or do other things.”
Expansion details
The Affordable Care Act assumed each state would expand Medicaid coverage for individuals living between 138 percent and 150 percent of the poverty line—more than 1 million Texans—who would not qualify to purchase a subsidy through the health insurance marketplace. However, the Supreme Court ruled the expansion would be optional by state, and Texas decided to opt out.
While it was initially thought the decision to opt out of the expansion would affect public hospitals the most, particularly in urban areas, it has affected all hospitals, said John Hawkins, senior vice president for government relations for the Texas Hospital Association.
“I think the reality is, with the high number of uninsured people in the state, and just the existing number of Medicaid patients and low payment on rates, it impacts all hospitals,” he said. “Any hospital that is running a true emergency room is going to see a lot of uninsured [patients] coming in through the ER.”
In Harris County, Emmett said a Medicaid expansion program would enable the state to draw down federal funds to reimburse the county and private hospital systems like Memorial Hermann that provide indigent care.
“We still have populations that are uncovered because of the failure to expand the Medicaid program, and so that really places a greater reliance on the safety net hospital system,” said Dennis Laraway, executive vice president and chief financial officer for Memorial Hermann. “Memorial Hermann is a very important safety net provider in the Houston community. That's part of our mission.”
“If you evaluate the total number of uninsured patients in the county, there are over a million. If you look at our data, I probably see about 200,000 of that million. [Of] the other 800,000 [patients], maybe 200,000 are visiting other providers’ emergency rooms and 600,000 just aren’t getting care.” —Michael Norby, executive vice president and CFO of Harris Health System
In addition, the Montgomery County Hospital District provides indigent care for about 1,800 eligible residents each year through its health care assistance program, which is funded through a countywide tax, Chief Operating Officer Melissa Miller said. The program provides qualifying low-income, uninsured residents with up to $60,000 a year in medical costs. If more than $60,000 a year in medical costs is required, MCHD connects patients with other health care resources in the Greater Houston area, Miller said.
“With [the ACA] going live, a lot of people qualified for the health [insurance marketplace], and our eligibility specialists were able to help them get signed up for those programs to provide their health care,” Miller said. “If they become eligible for Medicaid or disability [benefits] that will take them off of the [HCAP] program.”
Expanding coverage
The only groups that can qualify for Medicaid in Texas are pregnant women, children and people with disabilities, Janda said.
“The rationale is that [other populations are] able-bodied adults who should go out and get a job,” he said. “But when you look at the details of who they are, most of them are women taking care of small children or have chronic mental health conditions that make it impossible to keep a job.”
Adult males and females without children are not covered under the system, Laraway said. These people end up becoming charity care patients that hospitals are not reimbursed for under the existing system.
“If we look at our [Harris County] population from fiscal year 2015 and the percentage of our population [living] from zero to 138 percent of the federal poverty level that theoretically would have qualified for Medicaid—but for us represent charity care—it was over 50,000 patients with a potential reimbursement of approximately $75 million,” said Michael Norby, executive vice president and CFO of Harris Health System.
There are 19,000 existing patients in the Harris Health System living between 138 percent and 150 percent of the poverty line who were left without Medicaid coverage and unable to qualify for the health insurance marketplace when the ACA was passed, Norby said.
“If you evaluate the total number of uninsured patients in the county, there are over a million,” he said. “If you look at our data, I probably see about 200,000 of that million. [Of] the other 800,000 [patients], maybe 200,000 are visiting other providers’ emergency rooms and 600,000 just aren’t getting care.”
Expansion politics
Political discussions about Medicaid expansion focus on increasing the number of people served, but Emmett said the number of indigent residents covered would not change. He said the purpose of an expansion is to increase federal reimbursement.
“We still have populations that are uncovered because of the failure to expand the Medicaid program, and so that really places a greater reliance on the safety net hospital system. Memorial Hermann is a very important safety net provider in the Houston community. That's part of our mission.” —Dennis Laraway, executive vice president and chief financial officer for Memorial Hermann
In 2015, the federal government funded Medicaid expansion programs in other states at 100 percent, Norby said.
“That would’ve meant, for Harris Health alone, an incremental $75 million in reimbursement for care provided,” he said. “We ended up, in fiscal year 2015, with a $17 million loss. If you put $75 million toward that, we wouldn’t have ended up with a loss. We would’ve had $58 million more to provide incremental care for other segments of the population that didn’t have access to care.”
Alternatives to Medicaid expansion include waivers and block grants that would enable the state to draw funds from the federal government and disburse them for health care projects, said state Rep. John Zerwas, R-Simonton.
Zerwas authored House Bill 3791, a Medicaid expansion alternative, in the 2013 legislative session.
“There was strong opposition to [the ACA]—Texas opted not to go that route and looked at other ways [to fund health care],” Zerwas said. “We proposed [HB 3791] in 2013 to give the commissioner of Health and Human Services and the governor authority to provide waivers [through services, such as] health savings accounts, [a] copay [system] and rewards for healthy behavior—things we might see in private market plans that foster personal responsibility rather than an entitlement mentality.”
The bill did not make it to a House vote, and no major legislation was proposed in the 2015 session. A waiver program known as the 1115 waiver did come out of negotiations, he said.
“The 1115 waiver is a bucket of money to invest in health improvement projects,” Zerwas said.
Another option is the 1332 provision of the ACA that could give states block grants to reimburse Medicaid programs. Zerwas said the provision would not become an option until federal fiscal year 2017.
Additional reporting by Liza Winkler Correction: The lower threshold for the federal poverty limit range is 138 percent.
