ISSUE BRIEF SEPTEMBER 2019 Medicaid Expansion in Texas: Potential Economic and Employment Implications Lucy Chen, Joy Madubuonwu, Caroline Pecos-Duarte, and Benjamin D. Sommers ABSTRACT TOPLINES ISSUE: Texas is one of 17 states that has not expanded Medicaid, and it has Only 3 percent of low-income the highest uninsured rate of any state. Texans believe gaining Medicaid would make them GOAL: To examine how low-income Texans view the potential economic less likely to work. and employment implications of Medicaid expansion in their state. METHODS: Comparison of findings from a 2018 survey of low-income U.S. More than half of low-income citizens in Texas ages 19 to 64 with findings from a survey of low-income Texans surveyed said Medicaid adults in three Medicaid expansion states: Arkansas, Kentucky, and expansion would help the state’s economy. Louisiana. FINDINGS: Low-income adults in Texas were much more likely to be uninsured and to experience financial barriers to care than their counterparts in the three Medicaid expansion states. Only 3 percent of low-income Texans thought gaining Medicaid would make them less likely to work. Forty-two percent said gaining Medicaid would help their financial situation; 9 percent said it would worsen it. More than half of low-income Texans said Medicaid expansion would help the state’s economy. CONCLUSIONS: Most low-income Texans think Medicaid expansion would have positive economic effects on their families and the state. If Texas expands Medicaid, 1.2 million uninsured individuals could become eligible for coverage, which would likely increase affordability of care for low-income adults and produce other benefits to the state’s economy. Medicaid Expansion in Texas: Potential Economic and Employment Implications 2 BACKGROUND poverty level (FPL), or $3,626 for a family of three.4 If Texas Texas, one of 17 states that has not expanded Medicaid, is expanded Medicaid, approximately 1.2 million more home to 4.7 million people without health insurance. It is uninsured people would become eligible for the program.5 the state with the highest uninsured rate in the country, Even though many stakeholders in the state have advocated at 19 percent of the nonelderly population, compared with for expansion, the Texas legislature has not yet expanded the national average of 11 percent. Forecasts predict that the Medicaid despite considering multiple bills on the issue. share of uninsured Texans will increase in the coming years.1 This issue brief summarizes findings from a recent The high uninsured rate likely has significant impacts on telephone survey we conducted of 601 low-income U.S. Texans’ financial circumstances and Texas’s economy. citizens in Texas compared with 2,403 respondents in Research shows that being uninsured is associated with three Southern states that did expand Medicaid: Arkansas, increased financial burdens for individuals and families, Kentucky, and Louisiana. (See “How We Conducted This while gaining insurance through Medicaid expansion can Study” for further survey details.) reduce out-of-pocket medical expenditures and medical debt.2 Studies show that Medicaid expansion also reduces FINDINGS the share of uncompensated hospital care, which totaled $6.8 billion in Texas in 2016.3 Coverage and Access to Care in Texas Currently in Texas, adults without dependents or a Coverage rates and access to care are significantly worse disability are not eligible for Medicaid no matter how for low-income Texans than for low-income adults in the low their incomes. Parents are only eligible if their other three states, which have all expanded Medicaid annual income is approximately 17 percent of the federal (Exhibit 1). Of low-income Texans in our survey, 31 percent Exhibit 1 Low-Income Adults in Texas Are More Likely to Be Uninsured and Less Likely Exhibit 1. Low-Income Adults in Texas Are More Likely to Be Uninsured and Less Likely to Have Medicaid Than Those in Southern Expansion States Expansion States to Have Medicaid Than Those in Southern Percent of low-income adults 56% 57% 55% 31% 31% 14% 13% 8% Uninsured Medicaid Texas Arkansas Kentucky Louisiana Data: Authors’ analysis of data from telephone surveys of 3,004 U.S. citizens ages 19–64 with family incomes below 138% of poverty, Nov.–Dec. 2018. Data: Authors’ analysis of data from telephone surveys of 3,004 U.S. citizens ages 19–64 with family incomes below 138% of poverty, Nov.–Dec. 2018. commonwealthfund.org Issue Brief, September 2019 Source: Lucy Chen et al., Medicaid Expansion in Texas: Potential Economic and Employment Implications (Commonwealth Fund, Sept. 2019). Medicaid Expansion in Texas: Potential Economic and Employment Implications 3 were uninsured, consistent with other estimates in Arkansas, Kentucky, and Louisiana (p<0.001). These of the uninsured rate among low-income Texans.6 results are consistent with prior research documenting By comparison, 12 percent of low-income survey improvements in access to care after Medicaid expansion in respondents in Arkansas, Kentucky, and Louisiana were these states (compared with Texas) as well as nationally.7 uninsured, on average. Of low-income Texans in our survey, 31 percent reported having Medicaid coverage, Potential Expansion Effects on Personal Finances compared with an average of 55 percent in Arkansas, and Employment Kentucky, and Louisiana. Forty-two percent of low-income Texans currently Texans also were more likely to report financial barriers not enrolled in Medicaid felt that gaining Medicaid to care (Exhibit 2), with 39 percent reporting that they would help their financial situation, compared with had put off needed care in the past year because of cost, only 9 percent who said it would worsen their financial compared with 30 percent on average in Arkansas, situation (Exhibit 3). This finding is consistent with Kentucky, and Louisiana (p=0.01). When asked whether evidence supporting that Medicaid expansion reduces the cost of their own health care had become more or less out-of-pocket medical expenditures and medical debt, affordable in the past 12 months, 29 percent of low-income improving individuals’ personal finances.8 Texans reported that their care has become less affordable, Most low-income Texans (78%) said gaining Medicaid compared with 22 percent on average in Arkansas, would have no impact on whether they work. Only 3 Kentucky, and Louisiana (p=0.03). percent of low-income Texans felt that gaining Medicaid Fifty-four percent of Texans reported not having a would make them less likely to work or keep working, while personal doctor, compared with 36 percent on average 19 percent said it would make them more likely to work. Exhibit 2 Access to and Affordability of Care Is Significantly Worse for Low-Income Exhibit 2. Access to and Affordability of Care Is Significantly Worse for Low-Income Adults in Texas Than in Other Southern StatesOther Southern States Adults in Texas Than in Percent of low-income adults 54% 39% 39% 36% 34% 32% 28% 29% 27% 24% 20% 19% No personal doctor Delay in care because of cost Care less affordable in past year Texas Arkansas Kentucky Louisiana Data: Authors’ analysis of data from telephone surveys of 3,004 U.S. citizens ages 19–64 with family incomes below 138% of poverty, Nov.–Dec. 2018. Data: Authors’ analysis of data from telephone surveys of 3,004 U.S. citizens ages 19–64 with family incomes below 138% of poverty, Nov.–Dec. 2018. commonwealthfund.org Issue Brief, September 2019 Source: Lucy Chen et al., Medicaid Expansion in Texas: Potential Economic and Employment Implications (Commonwealth Fund, Sept. 2019). Medicaid Expansion in Texas: Potential Economic and Employment Implications 4 Currently, many states are considering implementing have shown that Medicaid expansion has reduced work requirements in their Medicaid programs. Advocates uncompensated care costs, suggesting expansion would of work requirements in Medicaid argue that they will improve financial conditions for Texas providers and improve health and increase employment. However, hospitals.10 recently published evidence from our survey shows that Arkansas’s implementation of work requirements in 2018 Expansion also has been associated with fewer rural led to a significant loss of coverage without an increase hospital closures (80% of which happen in nonexpansion in employment, and more than 95 percent of individuals states), where these entities account for 14 percent of total subject to the policy were already meeting or exempt employment on average.11 Indeed, since 2013, 19 rural from the work requirements.9 Since then, the courts Texas hospitals have closed permanently or temporarily have blocked work requirements in Arkansas, Kentucky, because of financial difficulties.12 In some locales, hospitals and New Hampshire because of concerns about loss of are becoming the default “insurer of last resort,” as coverage in Arkansas and whether work requirements are uninsured rates and hospital closures continue to climb.13 in keeping with the stated goals of Medicaid. Other studies of Medicaid expansion have found significant state budget savings from increased federal Potential Expansion Effects on Texas Economy funding of Medicaid, reduced spending on the uninsured, Most Texans in our survey (58%) thought that Medicaid and other offsetting reductions in state health care costs.14 expansion would help the state’s economy, while 11 Currently, government payments to hospitals offset some percent said it would hurt (Exhibit 3). Previous research uncompensated care costs, but that funding does not provides some support for this view. Multiple studies cover all of the losses.15 Additionally, much of that offset is Exhibit 3 Low-Income Texans’ Views on Economic and Employment Implications of Medicaid Expansion Exhibit 3. Low-Income Texans’ Views on Economic and Employment Implications of Medicaid Expansion Would gaining Medicaid Would gaining Medicaid Would expanding help or hurt your increase or decrease your Medicaid help or hurt financial situation? likelihood of working? the state economy? 58% 42% 19% 11% 9% 3% Help Hurt Increase Decrease Help Hurt Data:Authors’ analysis of data from telephone surveys of 601 U.S. citizens in U.S. citizens in with family incomes below 138% of poverty, Nov.–Dec. 2018. of poverty, Nov.–Dec. 2018. Data: Authors’ analysis of data from telephone surveys of 601 Texas ages 19–64 Texas ages 19–64 with family incomes below 138% The remainder of the the sample for each outcome responded “No“I don’t know.” or “I don’t know.” The remainder of sample for each outcome responded “No difference” or difference” commonwealthfund.org Source: Lucy Chen et al., Medicaid Expansion in Texas: Potential Economic and Employment Implications (Commonwealth Fund, Sept. 2019). Issue Brief, September 2019 Medicaid Expansion in Texas: Potential Economic and Employment Implications 5 paid for under a special 1115 waiver demonstration project Most low-income Texans think Medicaid would have that is set to expire in 2021.16 It is unclear if this funding positive economic effects on their families and the state. will be renewed and to what extent. Medicaid expansion in other states has been shown to have a wide range of benefits, including improved access to care, affordability of care, and better self-reported health, Future of Medicaid Expansion in Texas with no reductions in employment.19 Medicaid expansion In Texas’s 2019 legislative session, lawmakers introduced would bring an estimated $100 billion of federal funding multiple bills to expand Medicaid, either to all adults over the next decade into the state, which prior research with incomes under 138 percent of poverty (as Arkansas, suggests will help reduce the amount of uncompensated Kentucky, and Louisiana have done), or through more care, improve the financial health of hospitals and targeted expansions of coverage for pregnant women providers, and benefit the state economy.20 and those with substance-use disorder and mental health conditions. However, these bills did not gain traction, despite nearly two-thirds of Texans supporting expansion HOW WE CONDUCTED THIS STUDY in recent polls.17 The survey was conducted in November and December 2018. Respondents were U.S. citizens between ages 19 If Texas does choose to expand, it can tailor its expansion and 64, with family incomes at or below 138 percent to the needs of its population and its political climate. of poverty, which is the income cutoff under the Following the trend of other states that have recently Affordable Care Act for Medicaid eligibility. The survey expanded Medicaid, some policymakers have advocated was conducted in English or Spanish on landlines and including features such as work requirements or higher cellphones. cost-sharing in the form of premiums and copayments, or other reforms aimed at improving quality and The final sample included 601 respondents from Texas, reducing costs. However, evidence from Arkansas’s 2018 1,501 from Arkansas, 500 for Kentucky, and 402 from implementation of work requirements suggests that this Louisiana. The overall response rate was 14 percent in particular policy may not have the intended effects of 2018, according to the American Association for Public increasing employment and shifting people to employer- Opinion Research’s RR3 definition. All estimates were sponsored coverage. As Texas moves forward with its reweighted for potential survey nonresponse using Medicaid waiver renewal, the state may explore multiple Census Bureau benchmarks for age, gender, race/ethnicity, options in these areas. marital status, geographic region, population density, and cellphone use. CONCLUSION Respondents were asked about health insurance coverage, Low-income Texans continue to face challenges in health access to care, how Medicaid expansion would affect their insurance coverage and access to health care services, with employment and personal finances, and the potential significantly worse health care availability than in other impacts of Medicaid expansion on the Texas economy. Southern states that have expanded Medicaid. If Texas expands Medicaid, an estimated 1.2 million uninsured Texans would become eligible for Medicaid.18 commonwealthfund.org Issue Brief, September 2019 Medicaid Expansion in Texas: Potential Economic and Employment Implications 6 NOTES 1. Matthew Buettgens, Linda J. Blumberg, and Clare Pan, 10. Sayeh Nikpay, Thomas Buchmueller, and Helen G. The Uninsured in Texas: Statewide and Local Views (Urban Levy, “Affordable Care Act Medicaid Expansion Reduced Institute, Dec. 2018). Uninsured Hospital Stays in 2014,” Health Affairs 35, no. 1 (Jan. 2016): 106–10; and Blavin, “Association Between 2. Amy Finkelstein et al., “The Oregon Health Insurance 2014,” 2016. Experiment: Evidence from the First Year,” Quarterly Journal of Economics 127, no. 3 (Aug. 2012): 1057–1106. 11. Fred C. Eilrich, Gerald A. Doeksen, and Cheryl F. St. Clair, The Economic Impact of Recent Hospital Closures 3. Fredric Blavin, “Association Between the 2014 Medicaid on Rural Communities (National Center for Rural Health Expansion and U.S. Hospital Finances,” JAMA 316, no. 14 Works, July 2015). (Oct. 11, 2016): 1475–83; and Texas Health and Human Services Commission, Texas Hospital Uncompensated 12. “Rural Hospital Closures,” Texas Organization of Rural Care Report (Texas HHS, Jan. 16, 2019). and Community Hospitals, n.d. 4. “Medicaid Income Eligibility Limits for Adults as a 13. Craig Garthwaite, Tal Gross, and Matthew J. Percent of the Federal Poverty Level,” Henry J. Kaiser Notowidigdo, “Hospitals as Insurers of Last Resort,” Family Foundation, accessed Mar. 27, 2019. American Economic Journal: Applied Economics 10, no. 1 (Jan. 2018): 1–39. 5. Buettgens, Blumberg, and Pan, Uninsured in Texas, 2018. 14. Deborah Bachrach et al., States Expanding Medicaid See 6. Buettgens, Blumberg, and Pan, Uninsured in Texas, 2018. Significant Budget Savings and Revenue Gains (State Health 7. Olena Mazurenko et al., “The Effects of Medicaid Reform Assistance Network and Robert Wood Johnson Expansion Under the ACA: A Systematic Review,” Health Foundation, Mar. 2016). Affairs 37, no. 6 (June 2018): 944–50; and 15. Texas HHS, Texas Hospital Uncompensated, 2019. Benjamin D. Sommers et al., “Three-Year Impacts of the Affordable Care Act: Improved Medical Care and Health 16. Louise Norris, “Texas and the ACA’s Medicaid Among Low-Income Adults,” Health Affairs 36, no. 6 (June Expansion,” healthinsurance.org blog, Jan. 10, 2019. 2017): 1119–28. 17. Episcopal Health Foundation, “New EHF Texas 8. Mazurenko et al., “Effects of Medicaid Expansion,” 2018. Health Policy Poll: Texans Show Sweeping Support for Protections for Pre-Existing Conditions,” EHF, Mar. 2019. 9. Benjamin D. Sommers et al., “Medicaid Work Requirements — Results from the First Year in Arkansas,” 18. Buettgens, Blumberg, and Pan, Uninsured in Texas, 2018. New England Journal of Medicine, published online June 19. Mazurenko et al., “Effects Of Medicaid Expansion,” 2018. 19, 2019. 20. Norris, “Texas and ACA’s Medicaid,” 2019. commonwealthfund.org Issue Brief, September 2019 Medicaid Expansion in Texas: Potential Economic and Employment Implications 7 ABOUT THE AUTHORS ACKNOWLEDGMENTS Lucy Chen is an M.D.–Ph.D. candidate in Health Policy at Support for this research was provided in part by the Harvard University. Her research interests are in physician Robert Wood Johnson Foundation’s Policies for Action behavior, U.S. health care delivery reform, and access program. The views expressed here do not necessarily to care for vulnerable populations. Ms. Chen graduated reflect the views of the Foundation. The authors would from the University of Pennsylvania’s Life Sciences and like to thank Baylor Scott & White Health for providing, in Management Program with a B.S. in economics and B.A. in part, support for the study, as well as feedback on the brief. biology. Joy Madubuonwu is an M.P.H. candidate in health policy and management at the Harvard T.H. Chan School of For more information about this brief, please contact: Public Health. Her research interests are in U.S. health care Benjamin D. Sommers, M.D., Ph.D. delivery reform, maternal and child health care, and access Professor of Health Policy and Economics to affordable health care for vulnerable populations. Department of Health Policy and Management Before attending Harvard, Ms. Madubuonwu was an Harvard T.H. Chan School of Public Health Urban Fellow for New York City’s First Deputy Mayor Tony bsommershsph.harvard.edu Shorris and then a health policy analyst for Deputy Mayor for Health and Human Services Herminia Palacio. She graduated from New York University with a B.A. in global public health and medical anthropology. Caroline Pecos-Duarte is a third-year undergraduate student at Stanford University, where she is majoring in human biology. She plans to concentrate her studies in health policy focusing on minority populations in the U.S. Benjamin D. Sommers, M.D., Ph.D., is professor of health policy and economics in the Department of Health Policy and Management at the Harvard T.H. Chan School of Public Health. His main research interests are health policy for vulnerable populations, the uninsured, and the health care safety net. Sommers has received numerous awards for his research, including the Outstanding Dissertation Award, Alice Hersh New Investigator Award, and Article of the Year Award from AcademyHealth. He is a practicing primary care internist and an associate professor of medicine at Brigham & Women’s Hospital and Harvard Medical School. From 2011–2012, Sommers served as a senior advisor in the Office of the Assistant Secretary for Planning and Evaluation, U.S. Department of Health and Human Services. He received his medical degree from Harvard Medical School and his doctorate in health policy from Harvard University. Editorial support was provided by Laura Hegwer. commonwealthfund.org Issue Brief, September 2019 About the Commonwealth Fund The mission of the Commonwealth Fund is to promote a high-performing health care system that achieves better access, improved quality, and greater efficiency, particularly for society’s most vulnerable, including low-income people, the uninsured, and people of color. Support for this research was provided by the Commonwealth Fund. The views presented here are those of the authors and not necessarily those of the Commonwealth Fund or its directors, officers, or staff.