by Ted Shaw
If you’ve never been to Texas, it can be hard to understand the depth of pride we Texans have in our state. Some of it is hyperbole (“On the eighth day, God created Texas”), but our history as an economic powerhouse is real. You can’t lead the nation in job growth and new business creation and not feel a swell of pride.
But we have one persistent and real failure: Texas consistently leads the nation in the percentage of residents without health insurance. The latest estimate is that 22%—or 5.7 million—of our residents are uninsured. This includes approximately 1 million Texans who would qualify for Medicaid coverage if they lived in one of 29 other states in the country. Nearly 80% of these Texans are employed or in a working family, but either their employer does not provide health insurance coverage as an employment benefit or coverage is just unaffordable. Fifty thousand military Veterans are in this group.
The consequences for Texas hospitals and for our economy are also real. Passed under congressional Statutory Pay-as-You-Go Act rules, the Patient Protection and Affordable Care Act (ACA) pays for increased access to health insurance coverage in part with funding cuts to hospitals and other health care providers. Texas hospitals’ share of these cuts is $13 billion. At the same time, Texas hospitals provide more than $5.5 billion in uncompensated health care services to the uninsured each year. This is money that could be used to invest in technology, services, workforce, or research. Some of this cost is shifted onto the privately insured; health insurance premiums for Texas families with private insurance average $1,800 a year more because of the need to cover the costs for the uninsured. Local property taxes are also used to pay for health care services for the uninsured—the cost of which exceeds $1 billion annually.
Increasing access to coverage through the Medicaid program as envisioned in the ACA is not the best choice for Texas. It is a political nonstarter and, more importantly, not the most effective means of improving access to care. Medicaid reimbursement is well below cost for Texas hospitals: less than 50% for inpatient services and 72% for outpatient services. Enrollees regularly experience difficulty finding physicians and other providers who participate in Medicaid.
Leveraging the strengths of the private health insurance market would be more effective. The Texas Hospital Association and our partners in the business and medical communities support a plan that would
>Connect low-wage working Texans with private insurance coverage choices,
>Require personal responsibility for health care choices,
>Promote appropriate utilization of health care services, and
>Reduce inefficient health care spending.
There is real evidence from our neighbor to the east that such a plan would be effective. Arkansas was the first state to reject traditional Medicaid expansion in favor of enrolling its low-wage working residents in private health insurance plans. By every measure, that approach has been a success.
Since January 2014, more than 200,000 Arkansas residents have enrolled in private coverage, and the state’s rate of uninsured has dropped more than any other state in the nation. Before implementation of the private option, Arkansas and Texas shared the dubious distinction of having the highest and second-highest uninsured rates in the country. Today, Arkansas has one of the nation’s lowest uninsured rates.
For Arkansas’s hospitals, the results have been transformative. According to a survey conducted by the Arkansas Hospital Association and the Healthcare Financial Management Association, during the first 6 months of 2014,
>The number of hospitalizations by the uninsured fell 46.5%,
>The number of emergency department visits by those without insurance fell 35.5%,
>The number of outpatient clinic visits by the uninsured fell 36%, and
>Hospitals’ uncompensated care burden fell 56.4%.
In addition, unlike other states, such as Colorado and Oregon, that simply enrolled more people into their existing Medicaid programs and saw large increases in emergency room use, Arkansas experienced a minimal increase of 1.8%—further evidence that leveraging the strengths of the private market is the most effective approach to providing the right care in the right place at the right time.
Arkansas is also bending the cost curve. Its per-member-per-month spending for private option enrollees has declined for 8 consecutive months and is on track to be under its target of $500 for 2015. As would be expected, people with immediate health care needs enrolled in the program first. As enrollment of healthier and younger people increased, program costs have gone down.
This is real success. And it’s the kind of success for which Texas should be known.
Texas could do something about its large number of uninsured. It could make the fiscally responsible choice to increase access to private health insurance coverage and strengthen the state’s economy. It can do this without creating another entitlement program or adding to the state’s Medicaid rolls. It can do this by creating a private health insurance program that engages consumers in their own health and wellness.
It can do it the Texas way.
Source: Altarum Institute