Big, Cheap & Deadly: Rick Perry’s Medicaid Policy

On April 1, under the pink Texas Capitol Dome, the significance of the date was not lost to the half-dozen white men in dark business suits, each awaiting his three minutes at the lectern. (The buffoonish Congressman Joe Barton, the exception, wore a burgundy sports coat.)

“This seems to me an appropriate April Fools’ Day event,” Governor Rick Perry said.

Perry, in his 13th year in office, explained why denying Medicaid coverage to 1.5 million uninsured indigent residents of his state was good public policy. Senator Ted Cruz rehearsed the Obamacare tropes he would return to six months later, when he pushed the federal government into a shutdown and the Treasury to the edge of default. The state’s senior senator John Cornyn warned that expanding Medicaid would drive costs from 25 percent (it’s actually 22.8 percent) up to 100 percent of the state’s budget.

“The wealthy will purchase more and better health care than the poor … We need to accept the principle that sometimes poor people will die just because they are poor.” —Tyler Cowen

“[April Fools’ Day] makes it perfect to discuss something as foolish as Medicaid expansion and to remind everyone that Texas will not be held hostage by the Obama administration’s fool’s errand of adding more than a million Texans to a broken system,” Perry said.

The press conference concluded Perry’s (half-day) Health Care Roundtable. Policy experts briefly briefed the elected officials on the fiscal crisis that would ensue if Medicaid were expanded, then the elected officials explained to reporters why Medicaid will not be expanded in Texas.

This was zero-news-content political theater. Seven months earlier, Perry had written to Health and Human Services Secretary Kathleen Sebelius, informing her that he is rejecting any Medicaid expansion. Yet the presence of two senators, two congressmen, the governor and the lieutenant governor ensured a media turnout.

Facing Perry and the other elected officials—Cruz, Barton, Rep. Mike Burgess, Lieutenant Governor David Dewhurst—were 40 credentialed members of the media, most of them serving as scribes uncritically reporting what was said. The exception was Texas Monthly’s Paul Burka, whose column cast a cold, critical eye on Perry’s Medicaid policy.

Perhaps the real “news” on April Fools’ Day was that the governor was defending a policy that by the end of 2014 could result in the deaths of 9,000 residents of the state—most of them poor.

Reputable social science based on work published in the New England Journal of Medicine has concluded that by refusing to extend Medicaid to an additional 1.5 million Texans who become eligible in January, Perry and the Republican legislators who support his policy will kill 9,000 people next year, and each subsequent year the state refuses to implement Medicaid expansion authorized by Obamacare.

That’s 50 times the number of Texans who died at the Alamo, or using a more current metric, three times the number of people the state has executed since 1976.

This is social science, not hard science, so numbers aren’t exact. Another study, conducted by the state’s former deputy comptroller, predicts 8,400 deaths. (More on these studies below.)

Ideology not policy
“In Texas we have ideology, not policy,” Burka has said in attempts to make sense of decisions made by Perry and the Republican majority that has controlled the Legislature since 2002.

And ideology defines health care policy in Texas.

Obamacare—officially the Affordable Care Act (ACA)—created private insurance markets for most Americans, with subsidies for lower-income applicants. The poorest of the poor were to be covered by Medicaid, the Great Society program enacted 48 years ago to provide health care to the indigent.

When the ACA was signed into law in March 2010, it provided complete federal funding of expanded Medicaid for three years, after which states would contribute 10 percent of the cost of the program.

In June 2012, the Supreme Court ruled that states have the right to refuse the Medicaid expansion mandated in the ACA. Governors of states with the highest levels of poverty and the lowest number of insured—Texas, Louisiana, and Mississippi, to name a few—seized on the Supreme Court ruling. Since then, governors and a few legislatures in 26 states have refused Medicaid expansion.

The Deep South Republican states, except Arkansas, constitute the largest block rejecting Medicaid. They have essentially seceded from Medicaid coverage for their indigent populations. In each state refusing to expand Medicaid, the decision has been made by a Republican governor or legislature. The New York Times reported that states rejecting Medicaid are home to about half of the country’s population, but include 68 percent of poor, uninsured blacks and single mothers. And 60 percent of the nation’s poor live in the states declining additional Medicaid. Yet in no state do the consequences of those decisions effect as many people as in Texas. Of the 5.2 million officially poor Americans denied access to Medicaid because their state governments opted out of the program, 1.5 million live in Texas. Seventeen percent of Texans live below the poverty level, according to Census Bureau Data. The 2010 Census also found that 24 percent of Texans—6.2 million—had no health insurance coverage.

Of the total uninsured population, Medicaid expansion would have covered 1.5 million who qualify for the program, living at or below 133 percent of the federal poverty level: $14,800 for an individual or $31,000 for a family of four.

That train has passed.

Perry, who will leave office in 2016 presumably to run again for president, has made his decision and cannot back down—because it is canonical Tea Party policy and Perry cannot win the Republican presidential nomination (the longest of long shots) without the support of his party’s Tea Party base.

Greg Abbott—the state attorney general expected to be the Republican nominee for governor—is openly hostile to Medicaid expansion.

The biennial session of the Legislature has adjourned and can do no further harm, but Republican majorities in both chambers support the governor. In fact, an amendment ordering the governor to block Medicaid expansion only failed in the House by 71-68 because the chamber’s 55 Democrats voted with 17 Republicans opposing it.

Unless Senator Wendy Davis—the first Democratic gubernatorial candidate to pose a serious threat to Republican hegemony since George W. Bush was reelected in 1998—wins in 2016, the executive blockade of Medicaid expansion will remain in place for a while.

In refusing to expand Medicaid, Perry leaves a lot of money on the table. Under the Affordable Care Act, the federal government would have provided $100 billion while the state contributed $15 billion over the next 10 years.

The Perryman Group, a mainstream financial analysis firm in Waco, Texas, often cited by Republicans, has parted company with Perry on Medicaid.

According Ray Perryman, the firm’s president, residents of Texas pay federal income taxes so will inevitably pick up part of the tab for Medicaid expansion in the 23 states and the District of Columbia in which Medicaid will be expanded.

Perryman also describes Medicaid funding as something of a stealth stimulus program: $100 billion federal dollars would have resulted in $270 billion in economic growth over the next 10 years.

And, Perryman wrote, the health-care needs of the poor don’t disappear. They will be covered by 254 county governments required by state law to dedicate at least 8 percent of their budgets to indigent health care.

The bigger losers are urban counties that include the cities of Houston, Dallas-Fort Worth, and San Antonio, where more than 40 percent of annual budgets are dedicated to health care for the poor.

The biggest loser, of course, is the uninsured underclass that is denied access to health care.

Body count
It was Howard Brody, an MD, PhD at the University of Texas Medical School Galveston, who applied mortality statistics from a study published in the New England Journal of Medicine to the Texas population.

Brody concluded that if Texas expands Medicaid, as did the states in the study, 9,000 lives would be saved each year. If Texas fails to expand, 9,000 lives would be lost each year.

Fatalities will not be randomly distributed across the state, Brody told me in an e-mail exchange. “One would expect that regions with a higher percentage of poor and minorities would be more affected,” Brody said.

“I don’t know for a fact but would assume inner-city urban areas such as Houston and Dallas would be among such areas, but there are also many poor rural areas, such as parts of the Rio Grande Valley.”

Billy Hamilton, who for decades crunched numbers in the Texas Comptroller’s office, came to a similar conclusion in a study he conducted for the Metropolitan Healthcare Ministries of South Texas.

Hamilton concluded that “the new [Medicaid] coverage would save the lives of 5,700 adults and 2,700 children in Texas every year.”

Brody, Hamilton and other advocates of Medicaid are losing the debate. Conservative policy shops like the Texas Public Policy Foundation have prevailed. Arlene Wohlgemuth, a former Republican legislator, directs the foundation’s health policy center. She was the only witness testifying against a bill filed by a moderate House Republican trying to find a route to Medicaid expansion in Texas.(Perry had threatened to veto the bill.)

Wohlgemuth has said and written that Medicaid is worse than no insurance coverage at all. She was traveling, so I spoke to her associate, John Davidson.

“Medicaid is worse, in many cases, than no insurance,” Davidson said.

“Especially with this population of able-bodied adults. This is a very difficult population to insure.”

Not only do they fail to take advantage of Medicaid once they are enrolled, Davidson said, they use emergency room services more than people who have no insurance, driving up the costs of uncompensated care.

Davidson said that uninsured individuals are creative in their approach to medical care.

“When they go to see a physician, when they go to see a specialist,” Davidson said, “they can work out a discounted rate and a discounted payment plan so they can get whatever they need. The problem with Medicaid is that you can’t do that.”

Obama showed up in Dallas on November 7, in a quixotic effort to reignite the Medicaid expansion debate. Yet for the moment, or for the next four years, the issue is resolved in Texas. The governor, the lieutenant governor, the AG, and both houses of the Legislature will not be moved.

Dr. Brody, who teaches medical ethics, isn’t buying it.

He said he’d been told of a recent Time feature, “where those who agree with the governor and his policies extolled the Texas way of keeping taxes low and social services virtually non-existent as the new trend for the rest of the nation.” Brody believes the public is misread on the issue.

“As someone whose job it is to teach ethics,” Brody said, “I would point out that the vast majority of Americans, even of more conservative views, tend to agree that the lack of money should not mean that a person is denied medical care.”

The author of Time’s October 28 cover article was, it turns out, libertarian economist Tyler Cowen, who wrote that cheap living, cheap housing, jobs, and low taxes, are the reason Texas is growing faster than any other state.

Cowen has also been involved in the health care debate. He got a lot of attention last year when he argued that we need to accept that “the wealthy will purchase more and better health care than the poor … We need to accept the principle that sometimes poor people will die just because they are poor. Some of you don’t like the sound of that, but we already let the wealthy enjoy all sorts of other goods—most importantly status—which lengthen their lives and which the poor enjoy to a much lesser degree. We shouldn’t screw up our health care institutions by being too determined to fight inegalitarian principles …”

“More than any other state,” Cowen writes in Time, “Texas looks like the future.”


Lou Dubose is the editor of The Washington Spectator.