Obama Administration Extends Short-Term Medicaid Funds in Texas

The Obama administration has agreed to extend a short-term hospital Medicaid program that assists treating low-income, uninsured Texans, a victory for a state led by officials politically opposed to expanding Medicaid services for the state’s poor.

The Texas Health and Human Services Commission and the Centers for Medicare & Medicaid Services brokered a deal that prolongs the Medicaid 1115 Transformation Waiver through December 2017, another 15 months. The $29 billion five-year waiver program, approved in 2011, was set to expire in September and state health officials sought unsuccessfully to extend it another five years. The feds weren’t particularly ready to grant more 1115 funding to states that rejected the Medicaid expansion under the Affordable Care Act, arguing that if states had accepted it they would end up seeing fewer uninsured patients and in turn, the necessity for the waiver program would decrease as well. Texas’ ideologically motivated refusal has left roughly 1 million poor residents without coverage.

The temporary extension, which maintains current safety net funding levels, is a result of months of negotiation between the feds and Texas HHSC. The $3.1 billion in federal and local funds (pulled mostly from property taxes) will go toward uncompensated care for poor patients in Texas hospitals. “Failure to extend the 1115 waiver would have resulted in near catastrophic consequences for the state’s most vulnerable populations,” said Ted Shaw, president and CEO of the Texas Hospital Association, in a statement. “The waiver has been absolutely critical for increasing access to quality health care.”

The feds have requested the state submit an independent report analyzing the pool of uncompensated care patients (many of whom would fall into the Medicaid expansion “coverage gap”), according to CMS’ letter to HHSC. But if the state can’t play nice with the feds going forward, it stands to lose out: If a long-term compromise fails to be struck, the state will lose 25% of the funding for the specialized delivery program by the end of next year and another 25% each year afterward. Let's remember, Texas officials have a history of sacrificing funds meant to assist low-income, uninsured patients due to politics: In 2011, lawmakers rewrote provider eligibility rules to exclude abortion affiliates (i.e. Planned Parenthood) from the Medicaid Women’s Health Program, causing Texas to lose 90% of its federal matching grant funding, as the move was considered a violation of federal law.