One of the provisions in the ACA is that states expand Medicaid coverage to families with incomes up to 133% of poverty line. The governor does not want to comply with the program but the economic analysts at the Perryman Group argue that accepting the expansion is Texas' only rational choice:
“Neither the Affordable Care Act nor the Medicaid program is perfect, and there are many opportunities to provide needed health services in a more efficient and cost effective manner,” said Dr. Ray Perryman, “but if we don’t expand Medicaid coverage as envisioned under the Affordable Care Act, Texas loses an opportunity to enhance access to health care for about 1.5 million Texans and foregoes almost $90 billion in federal health care funds over the first 10 years.”
Texas is currently plagued by the highest rate of uninsurance and underinsurance in the nation, leading to lower than optimal health care spending, excessive uncompensated care, excessive morbidity and mortality, and lost productivity. If Texas doesn’t expand Medicaid under the ACA, there is a significant economic downside which must be weighed against potential savings in direct State outlays. The Perryman Group found that the economic benefits of improving access to care far more than outweigh the costs.
During the first 10 years after implementation, The Perryman Group estimates that the total cumulative gross benefits to the state economy include $270.0 billion (in 2012 dollars) in output (real gross product) and 3,174,640 person-years of employment. These overall gains stem from spending for health care which would be provided through the expansion, reducing uncompensated care (and, thus, the local government and private funds needed to pay for it), and improving outcomes through better care (reducing morbidity and mortality and thus increasing productivity).
State revenues required to implement the Medicaid expansion will of necessity be diverted from other potential uses, either in terms of the fiscal resources funding other public goods and services, lower taxes allowing for greater private sector activity, or some combination of spending increases and tax reductions. When this diversion is accounted for, the outcomes from expanding Medicaid are still $255.8 billion (in 2012 dollars) in output (real gross product) and 3,031,400 person-years of employment (about 300,000 per annum over the first 10 years of implementation).
