Texas Follows In Paul Ryan’s Footsteps: House Passes Measure To Block Grant Medicaid, Privatize Medicare

Yesterday, Texas lawmakers in the state house passed a 142-page measure in special session that could drastically change how 6.6 million Texans benefiting from Medicare, Medicaid, and SCHIP programs receive their care. The bill — which includes two controversial amendments that have yet to be adopted by the state Senate — strongly mirror the reforms offered in Rep. Paul Ryan’s (R-WI) budget, but would have to be approved by the federal government:

— Convert Medicaid into a block grant: The state will apply for a waiver that would convert the existing Medicaid financing structure — under which the federal government reimburses Texas for a certain percentage of its Medicaid spending — into a capped block grant that would increase only for population and the general rate of inflation, not medical inflation.

— Privatize Medicare: Texas would enter a compact that would exempt the state from the federal eligibility and benefit rules in the Medicaid program and from all Medicare rules, allowing lawmakers to “possibly sweep Texas seniors on Medicare into private health insurance policies.”

State medical providers are already raising concerns, arguing “the proposals are too vague about what would happen to existing services and eligibility rules” and that it could lead the state to lower its rock-bottom reimbursement rates. The medical groups note that the proposals would bring less federal dollars into the state and prevent Texas from receiving more funds during economic downturns. “Only federal stimulus money balanced the Medicaid budget two years ago, and lawmakers this year have punted a $4.8 billion Medicaid IOU to 2013,” they say.

But Rep. Lois Kolkhorst (R), who sponsored the measures, promised that the state would be able to use “innovation” to stretch the more limited federal contribution. She did not provide any further details. A recent analysis of the effects of the GOP’s budget on the states from the Kaiser Family Foundation concluded that Texas could lose 38.4 percent of its federal dollars and may have to cut enrollment in Medicaid by up to 52 percent.

Last year, Gov. Rick Perry (R-TX) suggested that Texas may opt out of the Medicaid program entirely, but walked back the idea after a state report concluded that 2.6 million Texans would be left uninsured. Texas currently has the highest uninsurance rate in the nation.