AUSTIN (AP) — If the Texas Legislature is in session, there must be a fight about Medicaid going on.
The health care program for the disabled, the elderly poor and the impoverished raises hackles every two years, mostly because the number in need keeps rising alongside health care costs. Texas lawmakers also regularly underfund the joint state-federal program to pass a so-called balanced budget, only to act surprised to find they created a budget deficit when they return to Austin.
The 2013 legislative session, however, adds a new wrinkle: President Barack Obama's Affordable Care Act and its provision to dramatically expand Medicaid.
Before lawmakers can even think about expanding the program, though, they must pass an emergency supplemental spending bill to cover the $4.7 billion hole they left in Medicaid in 2011. The expense is non-negotiable since the federal government requires states to put in $1 to get about $2 in matching funds.
Failure to appropriate the money would shut down Texas Medicaid in March, leaving one in seven Texans without health care. In 2011, lawmakers used the Rainy Day Fund to make up for the Medicaid deficit they created, but higher than expected state revenues could mean there is a big enough surplus to avoid tapping the fund next year.
Once that problem is solved, lawmakers will begin work on the Medicaid budget for the next two years, and will have to find another $5 billion to at least match what Medicaid cost over the last two years.
Medicaid is the program that conservatives love to hate. Federal law requires states to provide a minimum level of services and to follow federal regulations in return for funding from Washington, something that especially rubs Gov. Rick Perry the wrong way. He's asked both the Bush and Obama Administrations to just give Texas the money without strings attached, both times without success.
Medicaid now makes up almost a third of the state budget that lawmakers can control. With each year the Republican-controlled Legislature blocks raising taxes, the Medicaid portion of the budget grows.
"The dollars for health care are becoming so large that they are squeezing out other priorities," said Rep. Lois Kolkhorst, the chair of the House Public Health Committee. "They are squeezing out higher education, public education and there's a great concern about how much more can we spend in this arena."
With Lt. Gov. David Dewhurst and House Speaker Joe Straus pledging to only increase state spending by $7 billion in the next two-year budget cycle, lawmakers are facing the prospect of either cutting Medicaid benefits or public school funding even further to make the budget balance, even with accounting tricks like underfunding Medicaid.
A completely separate Medicaid issue is whether to expand the program to make sure everyone in Texas has health insurance under the Affordable Care Act.
A U.S. Supreme Court decision earlier this year allows states to opt-out of expanding Medicaid to give the working poor get health coverage. Perry has said Texas will not add people to Medicaid roles and instead wants the Obama administration to give Texas the money without any strings attached so it can make its own health plan for the poor and disabled.
Perry opposes the federal program, claiming it infringes on state's rights. Yet according to an economic analysis by the independent Perryman Group, rejecting the program will cost Texas $89 billion in federal funds. The economic analysis firm also found that if Texas participated, every $1 spent by the Texas on Medicaid expansion would result in $1.29 in state tax revenue.
Democrats aren't ready to give up on changing Perry's mind yet, and with Texas hospitals calling on Perry to accept the federal money, some think a deal is possible.
Rep. Garnet Coleman, a 21-year veteran lawmaker who serves on the House Public Health committee, said he thinks there is a 50-50 chance of the Legislature expanding Medicaid in Texas. One of the most attractive reasons to expand Medicaid is that it will inject $125 billion of federal money into the Texas health care system over 10 years, creating new jobs as well as providing coverage, he added.
But the Houston Democrat knows that Republicans will need to get something in return. Perry and his newly appointed health and human services commissioner, Kyle Janek, have spoken a lot about making Medicaid recipients contribute something toward paying for their health care, like a premium payment or a co-pay. Federal regulations currently prohibit states from making such a requirement.
Coleman said he supports co-insurance — as long as it's affordable for the people who rely on Medicaid — and he promised to lobby Washington for a waiver to allow one in Texas.
Kolkhorst said the Republican majority in the Legislature would need to see a lot flexibility from Washington before they could expect Perry to change his mind.
"I think the governor's hardline stance right now is a good place to be ... though I want to say the Obama administration has seemingly been more willing than other administrations to consider some flexibility," she said. "Right now Texas is pretty dug in, and I think the Legislature will stick with that."
That could just be a negotiating position at the beginning of the session, Coleman said, citing how Perry accepted $6 billion in federal stimulus money in 2009 after haranguing Congress about spending. If there is a deal, it will likely not come until the end of the session in May.
"He made a big deal about the stimulus, but he took it," Coleman said. "He goes out and says, 'We don't want any of that dirty federal money' and then he takes it."