Texas Braces For Medicaid Cuts Under GOP Health Plan

Mar 17, 2017
Originally published on March 17, 2017 4:49 am

Many in Texas are keeping a close eye on the Republican bid to replace the Affordable Care Act. One of the big changes is how it would affect low-income people, seniors, and people with disabilities who get help from Medicaid. And people on both sides of the political spectrum say the Lone Star State is not going to fare well.

As the GOP bill, the American Health Care Act, works its way through Congress, Anne Dunkelberg with the left-leaning Center for Public Policy Priorities in Austin says she's a little stumped.

"I have worked on Medicaid and uninsured and health care access issues in Texas for well over 20 years," she chuckles. She says this bill leaves the fate of some current funding streams unclear and there's one pot of money she's particularly concerned about. Texas has struck deals with the federal government to help reimburse hospitals for the cost of caring for people who don't have insurance. And Texas has more uninsured residents than any other state.

"About half of what Texas hospitals get from Medicaid today comes through payments that are outside from the regular Medicaid program," she says, which adds up to $4 billion in federal funds every year.

But even if Texas gets to keep all that money, there's another whammy — the GOP plan caps how much money states get for Medicaid from the federal government for every person they cover. It's called a per-capita cap, and the payments under that formula would start in 2020, but would be based on how much the state spends this year.

Adriana Kohler with Texans Care for Children, an advocacy group based in Austin, says Texas already leaves too many people without care.

"Last legislative session there were cuts to pediatric therapies for kids with disabilities enrolled in Medicaid," she says. The cuts caused some providers to shut their doors, which left some children without services, she says. "That's why these cuts coming down from the ACA repeal bill are very concerning to us."

She says in Texas, children, pregnant women, seniors, and people with disabilities will bear the brunt of any belt-tightening. These populations make up 96 percent of people on Medicaid in Texas. That's why Dunkelberg says the program as is should not be the baseline for years to come.

"They could lock Texas into a lot of historical decisions that were strictly driven by a desire to write the smallest budget possible," she says.

Some on the right agree Texas is getting a raw deal. Doctor Deane Waldman with the right-leaning Texas Public Policy Foundation says there are things he likes in the bill. But in general he says, "It's bad deal for Texas. It's a bad deal for the American people."

He says it was the right thing for Texas not to expand Medicaid, but this bill punishes Texas for it. Under the GOP bill, states that expanded Medicaid would get more money. And because the Republican bill leaves the door open for states to expand Medicaid before 2020, he thinks more states will do that to get in on the deal.

"It's going to be a huge rush — an inducement to drag in as many people as they can drag in, because the more they can drag in, the more federal dollars they can get," he says.

That, in turn, will make Medicaid spending skyrocket, he says. But if Texas still refuses to expand, it will have to share a pot of $10 billion over five years with other non-expansion states, per the GOP bill. And that would be just a drop in a bucket for a state as big as Texas.

This story is part of a reporting partnership with NPR, KUT and Kaiser Health News.

Copyright 2017 KUT-FM. To see more, visit KUT-FM.

AUDIE CORNISH, HOST:

President Trump says he wants to help lower the cost of prescription drugs for consumers. He hasn't given clear signals as to what he might do to make that happen, but since he's an unconventional leader, NPR's Alison Kodjak decided to take a look at some of the unconventional proposals out there to slash the prices of expensive medications. Yesterday she asked whether the government should use its patent rights to drive down prices. Today she looks at a proposal to have the government buy a drug company.

ALISON KODJAK, BYLINE: Gilead Sciences released the first of its two revolutionary hepatitis C drugs in December 2013. Both drugs cured just about everyone who gets them, but only a fraction of the millions of people who are infected have been treated. Dr. Peter Bach of Memorial Sloan Kettering Cancer Center in New York blames the price.

PETER BACH: The original list price of those treatments was $85,000 to $95,000. That's for a treatment that should go to 3.3 million people. All right, so that's $300 billion, give or take. That's about what we spend on drugs overall in the U.S.

KODJAK: Bach is Director of Health Policy and outcomes at Sloan Kettering, and he's been tracking drug price trends for years. He says the big price tag for Gilead's hepatitis C drugs and their competitors have lead insurance companies and state Medicaid programs to restrict access. So this contagious disease just keeps spreading.

President Trump has complained repeatedly about high drug prices and promised to do something to bring them down. Here's what he said last month in a speech to congress.

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PRESIDENT DONALD TRUMP: We should implement legal reforms that protect patients and doctors from unnecessary cause that drive up the price of insurance and work to bring down the artificially high price of drugs and bring them down immediately.

(APPLAUSE)

KODJAK: But what can he do? Peter Bach at Sloan Kettering has an idea.

BACH: Buy the company at a market price from the shareholders.

KODJAK: That's right. Have the government buy the company. He says the government could actually save money and treat everyone with hepatitis C if it bought Gilead outright rather than buying its expensive drugs.

BACH: With the prices that Gilead wants to charge, there's really no return on a government public health investment in finding people with hepatitis C because the treatments are unaffordable.

KODJAK: But if the government bought the company on the open market, its stock is now worth about $90 billion. It could keep the rights to the hepatitis drugs, sell off the other assets and treat the millions of people with hepatitis C for about a quarter of what it costs today.

BACH: We will also reduce the number of liver transplants needed by patients with hepatitis C. And there's a queue right now for liver transplants. So it will free up those livers for other patients that we can't cure.

KODJAK: Gilead's senior vice president, Gregg Alton, called Bach's idea an interesting thought experiment. But the problem isn't the price of his drug, he says. It's the speed at which it cures people.

GREGG ALTON: The cost of the drug is concentrated in two to three months as opposed to spread out over a lifetime. And our payment systems have a real tough time with that because they're used to the sort of long-term, chronic therapies that you pay a little bit as you go but over time actually end up paying a lot more.

KODJAK: In other words, it can cost a lot more to treat diabetes over a lifetime than to cure hepatitis C in three months. Sara Fisher Ellison, an economics lecturer at MIT, says buying Gilead to cure disease isn't a terrible idea as long as the government pays the full market price.

SARA FISHER ELLISON: The reason this proposal could work is that right now the drugs are only serving a very small fraction of the potential patients. And there's a big public-health benefit to serving all of the patients. And that's something that Gilead doesn't take into account when it sets its pricing policy. But it's something that a government does take into account.

KODJAK: The idea is a long shot of course, but with Donald Trump in the Oval Office, there's always the possibility he'd be tempted by the thought of making a deal. Alison Kodjak, NPR News, Washington. Transcript provided by NPR, Copyright NPR.