This column is part of a Dallas Morning News opinion project outlining critical issues at stake as the Texas Legislature convenes. Find the full project at dallasnews.com/opinion.
To expand or not to expand? That is Texas’ Medicaid question. The question has much to do with the behavior of diners when splitting the check. And, it’s important to ask where additional supplies of care will come from if Medicaid expansion increases demand for care.
Texas is among 12 states that haven’t adopted the Medicaid expansion offered by the Affordable Care Act. Two other states have adopted the expansion but haven’t yet implemented it.
Pre-ACA, Medicaid was reserved for those whose household incomes fall below the federal poverty level, currently $26,200 for a family of four and lower in some states. Eligibility in a particular state can also depend upon household size, disabilities, family status and other factors. Under the ACA, anyone whose household income falls below 138% of the federal poverty level ($36,156 for a family of four) is eligible.
Now, to the splitting-the-check-at-dinner problem. Imagine you’re at a table of 10 diners. None of you is willing to spend $50 for the signature dessert. But if you’re splitting the check, you can order the dessert for yourself, knowing that your share of the total bill will only rise by $5, with your fellow diners paying the other 90% of the cost of your dessert. But then, each of your nine companions has the same thought. Everyone orders the dessert, and all end up paying the $50 that each was unwilling to spend separately.
Similarly, adding millions of beneficiaries to Medicaid’s rolls costs a lot of money — likely more than any state is willing to pay on its own. But under the ACA, a state that expands Medicaid pays only 10% of the cost, with 90% falling on federal coffers and, hence, mostly on other states’ taxpayers. Initially, a sizable number of states resisted that temptation, but one-by-one, those states have given in.
(Initially, the ACA imposed draconian financial penalties on states that refused to expand Medicaid, but in 2012, the U.S. Supreme Court struck down those penalties as coercive.)
In 2021, once again, Texas will decide whether to join those states that have acquiesced. There is special pressure, since Texas has the most uninsured residents of any state — 5 million, or 17.7% of the population in 2018, according to the Mosbacher Institute for Trade, Economics & Public Policy at Texas A&M University.
There is, however, an aspect to the Medicaid expansion that deserves more attention. The expansion would increase the demand for health care without increasing the supply of care. In fairness, this is true of most other high-profile federal health insurance reform proposals — the ACA itself, “Medicare for All” (single-payer), various Republican proposals, and the “public option” idea favored by President-elect Joe Biden. Each proposal shuffles who gets how much of a largely fixed supply of care and who pays how much for what they get.
In considering whether to expand the demand for care, Texas policymakers may wish to consider how to expand the supply of care. This can mean increasing the number of doctors, nurses, hospital beds, pills, lab tests and machines; or, it can mean finding ways to use current resources more efficiently.
The COVID-19 pandemic laid bare the inefficiencies baked into our health care system. Access, flexibility and the ability to adapt to rapidly changing conditions are all part of a well-functioning system. And our heavy layers of state and federal regulation diminish the health care industry’s ability to be fleet-of-foot or truly innovative. These are the very capabilities needed to effectively respond to a novel and devastating virus or to increasing demand for everyday care.
Fortunately, 2020′s crisis sparked emergency actions. For example, under the Coronavirus Preparedness and Response Supplemental Appropriations Act, the Centers for Medicare & Medicaid Services provided waivers allowing broad integration of telemedicine into health care providers’ practices. Yet telemedicine has been available as a technology for decades and stymied for years by state and federal regulatory barriers to payment and use. To its credit, Texas became much more telemedicine-friendly through landmark legislation passed in 2017.
How much better off would the whole country be if regulations hadn’t shackled the health care industry’s ability to respond to the crisis?
As COVID-19 cases rise, ICU beds (and personnel to manage them) are in critically short supply. Yet for years, certificate-of-need laws have obstructed the expansion of health care infrastructure. Once a health care crisis hits, scurrying to meet the need is always too late. States hit particularly hard by COVID-19 are desperate for health care workers, yet workforce mobility has been hampered for years by state-level licensing laws and scope-of-practice limitations.
What can be done? The impact of November’s elections on deregulation won’t be known for some time. But states have substantial clout in crafting the regulatory environment. They don’t need federal permission to improve the atmosphere for innovation.
Some ideas on how to do so are found in the Healthcare Openness and Access Project, which we, with our colleague Jared Rhoads, produce for the Mercatus Center at George Mason University. HOAP ranks states on the flexibility and discretion given to patients and providers.
HOAP data place Texas in the middle of the pack (27th among states), based on its regulation of health care professions, institutions, patients, payments, delivery of care. Texas is most open when it comes to paying for health care (ranking ninth) and among the least open in professional regulation (ranking 46th), which encompasses restrictions on medical license reciprocity, scope of practice, continuing medical education requirements, and liability protection for charity caregivers.
The crisis of 2020 forced the whole nation into an unprecedentedly massive experiment in deregulation. Events forced new modes of access, flexibility and adaptability onto policymakers and health care providers. The challenge for legislators in Texas and elsewhere in 2021 will be to figure out ways to build on the unexpected success stories wrought by the pandemic.
Legislators considering Medicaid expansion may wish to ponder how the supplies of care can be increased to meet the resulting demand.
Dr. Darcy Nikol Bryan is an obstetrics and gynecology physician in Tampa and a senior affiliated scholar with the Mercatus Center at George Mason University.
Robert Graboyes is a senior research fellow with the Mercatus Center, where he focuses on innovation in health care.
They wrote this column for The Dallas Morning News.
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