A $4.5 billion expansion of a federal health insurance subsidy program could take $5.1 billion out of the state budget and into the general fund, Republican lawmakers say.
But the nonpartisan Legislative Fiscal Bureau estimated the money would not be lost if the state repealed the Medicaid expansion and replaced it with a new state-funded plan.
A proposal to cut the cost of Medicaid in two phases, starting with the second phase, would reduce the state’s $5,919 per enrollee per month federal subsidy for the program by $535 per enrolle per month, the LFB said.
That could cost about $1.8 billion, or 4 percent of the projected 2018 budget, it said.
The $2.6 billion projected for a second phase would be offset by $500 million for the expansion and $2 billion for the second payment for Medicaid expansion, the state said.
A second round of cuts could cost $2,200 per enroller per month.
The nonpartisan Legislative Budget Office, a nonpartisan legislative watchdog, said it was not certain how much of the savings would come from the second expansion and whether it would be sufficient to offset the lost federal funding.
“It’s not clear yet whether the reduction in federal funding would be enough to offset any of the reduction that would occur from repealing the expansion,” said Jennifer Karp, a senior vice president at the Legislative Fiscal Institute.
Karp said it would take about three months for the state to figure out the full impact of the Medicaid cuts, because the state will have to cut services and services will be cut.
“The impact of this reduction will be felt by the people of Texas, which is the people that are currently receiving these benefits,” Karp told reporters Monday.
“But that’s not what this is about.
This is about making sure that people can get the services they need to live a life that is healthy.”
The state is also taking a hit from its Medicaid expansion because the program now covers about 70 percent of all Texans.
“We have had some tough decisions,” said Gov.
Greg Abbott, a Republican who has said he is open to a Medicaid-expansion proposal, “but this one is going to be tougher.”
The new federal funding is part of a broader plan to provide money to cover the costs of expanding Medicaid to more people, including reducing out-of-pocket expenses for low-income Texans and making sure the program continues to cover mental health services.
The federal government has said it will reimburse Texas for $9.6 million in costs over a two-year period, $5 million more than what it pays the state.