On June 28, 2012, the U.S. Supreme Court ruled that the Affordable Care Act (ACA) is constitutional, including the individual requirement that most Americans obtain health insurance. However the court also ruled that Medicaid expansion is optional for each state and states that do not participate in the expansion can continue to receive federal funds for their existing Medicaid program.
Texas legislators and other state leaders are analyzing what’s ahead for the state and its budget before health care reform takes full effect in 2014. This will include an intense focus on Medicaid when the legislature meets beginning in January to decide whether to expand Medicaid to serve people up to 133 percent of the federal poverty level and add an estimated 2.5 million Texans to the program. If the state opts out of the Medicaid expansion, Texas will avoid about $16 billion in costs over the next 10 years, but it will lose out on $100 billion in federal matching funds to cover individuals who otherwise may not have health insurance.
As it stands now, Gov. Rick Perry sent a letter to the federal government in July opposing Medicaid eligibility expansion and stating that Texas will not create a state-run health insurance exchange, which is also optional. States that do not create their own exchange will use a national exchange as a marketplace where people without job-based coverage and small business employees can compare and purchase health insurance.
Texas leaders are predicting that Medicaid enrollment and costs will go up as uninsured individuals who are currently eligible but not enrolled join because of the individual mandate requiring them to have insurance starting in 2014. Children make up two-thirds of the Medicaid population in Texas now and one-third have disabilities or are senior citizens, such as nursing facility residents.