Analysis Law and Policy

Is Rick Perry’s Rejection of the Affordable Care Act Political Posturing or a Portent of What’s to Come?

Andrea Grimes

On Monday, Texas Governor Rick Perry rejected two major tenets of the Affordable Care act, saying the state would not participate in the individual state exchanges nor in the Medicaid expansion. What does this mean for a state with the highest rate of uninsured citizens -- a state that already rejected federal funds for the Medicaid Women's Health Program? Experts say the result will be escalating private insurance costs and declining public health.

On Monday, Texas Governor Rick Perry publicly rejected two major tenets of the Affordable Care act, saying the state would not participate in the individual state exchanges nor in the federal Medicaid expansion. In a letter to U.S. Health and Human Services Secretary Kathleen Sebelius released yesterday, Perry wrote that the “Orwellian-named PPACA” would “make Texas a mere appendage of the federal government when it comes to health care.”

Texas, which has the highest rate of uninsured people in the country — about one in four Texans currently have no insurance — could receive over a hundred million dollars from the federal government over the next few years, enabling the state to dramatically expand Medicaid overage to low-income adults who are not currently eligible. But, instead, Perry wrote that he believes the Medicaid expansion would “exacerbate the failure of the current system, and would threaten even Texas with financial ruin.”

Texas is already in serious financial trouble, and Perry’s dedication to rejecting any help, and refusing to dip into state reserves, has put it in ever more dire straits. The state notably grappled with its multi-billion dollar budget shortfall during last year’s legislative session; Perry has repeatedly refused to tap into the state’s “Rainy Day Fund” to address the state’s health and education needs, opting instead to cut public services. Perry also turned down millions in federal Medicaid funding for the Women’s Health Program in order to exclude Planned Parenthood from participating in the program in Texas.

Perry’s claims in the Sebelius letter are woefully misinformed, according to one public health policy expert at Houston’s Rice University. Elena Marks, a Baker Institute Scholar in Health Policy at and former director of health and environmental policy for the City of Houston, says it’s a “shame” that Perry can’t see the good a state-run insurance exchange could do for Texas, because if Texas doesn’t set up its own exchange, the ACA ensures the federal government will do it for the state instead.

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“If the state doesn’t set it up, the Feds will,” said Marks, “and that would be a shame for Texas.” Instead of Texas experts on Texas soil deciding what the exchange would look like according to federal rules — especially since, says Marks, federal “parameters still give you a lot of opportunity to tailor an exchange to meet the unique needs for yourself” — the federal government will set up a one size fits all program.

“I’m sorry that we Texans who know the Texas population and health care needs and provider community the best will not be the ones designing the exchange and all the things that go with it,” said Marks. As for the Medicaid expansion, she said it’s simply good public policy to accept the federal money — not least because of the 3.25 multiplier effect, which means that every dollar spent on Medicaid and CHIP “generates 3.25 times that amount in economic activity.”

“Economically, as a matter of providing health care from a public health perspective, the Medicaid expansion makes complete sense,” said Marks. It covers low-income people who can’t afford insurance in the exchanges, for whom “the chance of being able to buy insurance under any kind of market condition is pretty much non-existent.”

Do you put these people on Medicaid? Or, says Marks, “do you leave them uninsured?”

About 1.7 million more Texans could be eligible for Medicaid under the PPACA, which allows people with an income of up to 133 percent of the federal poverty line to participate. In Texas, people who would otherwise have gotten care at emergency rooms or county hospitals would be covered, resulting in an overall savings for the state. “The cost of their care doesn’t get pushed away,” said Marks, “It just gets shifted.”

Fewer Texas doctors than ever are willing to take on new Medicaid patients, despite the growing demand. Also on Monday, the Texas Medical Association released a survey of 1,000 of its 46,000 members revealing that just 31 percent of its members are accepting new Medicaid patients; in 2010 that number was 42 percent, and in 2000, the number was 67 percent. As fewer doctors take on new Medicaid patients, the number of uninsured people in Texas continues to rise — which means the cost of health insurance goes up to address that gap.

But according to the TMA’s estimates, insured Texas families pay nearly 80 percent more than the national average in premiums to cover the cost of care for the uninsured.

Dan Stultz, the director of the Texas Hospital Association, expressed related concerns to the Texas Tribune, saying that that the expansion would mean fewer uninsured Texans “seeking care in emergency rooms, shifting costs to the privately-insured and increasing uncompensated care to health care providers.”

The question that remains is whether Rick Perry will really stick to his guns on the ACA refusal in the future. Dr. Harold Pollack, at the University of Chicago’s Center for Health Administration Studies, says he’s skeptical of Perry’s current claims.

“We really have to wait until after the election,” said Pollack, because “there’s a huge amount of posturing going on right now that needs to be taken with a little bit of a grain of salt.” He called Perry a “polarizing figure” and that “a lot of his statements need to be read in that light.”

Despite Perry’s claims to the contrary, Pollack says he’s “very confident that at sometime in the near future, that Texas will participate in the Medicaid expansion.”

The reason? It’s simply too good an offer for Texas to pass up. “If you smooth it out over time, it’s a 90 percent federal match for services for a huge amount of low-income residents, but it’s also for city and state governments, nonprofits, health care agencies, hospitals,” and the list goes on, said Pollack.

In the end, said Pollack, “Texas probably has the most to gain of any state.”

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