Texas will leave more than $76 billion from the federal government on the table if Gov. Rick Perry gets his wish and the state does not expand its Medicaid program or establish a health insurance exchange in accordance with the Patient Protection and Affordable Care Act.
But Perry said the two initiatives could bankrupt the state and called them "brazen intrusions to the sovereignty of our state," neither of which would result in better patient protection or more affordable care.
State and federal Republican officials praised his move, saying the legislation could eventually leave the state holding the bag for billions in additional spending.
But the hospital industry and patient-care advocates say taxpayers will have to continue footing the bill for uninsured people, who will seek medical care when they're the sickest and most expensive to treat.
The hospital industry in Texas, which has agreed to more than $14 billion in reimbursement reductions that accompany the federal law, is a big supporter of the legislation for many reasons, said Steve Love, president of the Dallas-Fort Worth hospital council.
Only about half the adult population in Texas receives health insurance through an employer, because many Texans work in industries such as food service, retail and agriculture that don't provide coverage, Love said.
About a fifth of adults ages 19 to 64 live in poverty, and the Medicaid expansion is intended to provide many of them with coverage, Love said. An additional 1.2 million Texans would be eligible for Medicaid in 2014 under the proposed expansion.
"From an industry perspective, we are disappointed that Texas Gov. Rick Perry announced that Texas will not expand Medicaid coverage or implement a state health insurance exchange," Love said. "Since we will not establish a state health insurance exchange, the federal government will create one for Texas. Millions of Texans who were eligible to gain coverage through the Medicaid expansion will now not qualify."
The federal government will cover the entire cost of the Medicaid expansion through 2016 and most of it until 2020, so initially, the bills at the state level will be limited, Love said.
Over time, he said, the state may be able to work on some of the problems and budget difficulties that present themselves while the law is being implemented and do a better job of caring for impoverished Texans.
"If we don't expand Medicaid and set up health insurance exchanges, the situation will not get any better," Love said.
But Perry wrote that the two provisions would make Texas an appendage of the federal government, giving Washington officials the final say as to which insurance plans could operate in Texas, what benefits those plans must provide, and what price controls and cost limits would apply.
"It leaves many questions to be answered later through future federal rulemaking," he wrote to Kathleen Sebelius, health and human services secretary.
Some of Perry's sharpest criticism was reserved for the provision that calls for expanding Medicaid, which he called a broken system that is already financially unsustainable.
"Medicaid is a system of inflexible mandates, one-size-fits-all requirements and wasteful, bureaucratic inefficiencies. Expanding it as the PPACA provides would only exacerbate the failure of the current system, and would threaten even Texas with financial ruin," Perry's letter says.