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Texas and the ACA’s Medicaid expansion

Lack of Medicaid expansion and stringent eligibility requirements drive highest uninsured rate in U.S.

ACA’s Medicaid expansion still not implemented in Texas

Texas has not expanded Medicaid under the Affordable Care Act (ACA). As a result, Texas has the biggest coverage gap in the country, with an estimated 771,000 residents ineligible for Medicaid and also ineligible for premium subsidies to offset the cost of private coverage in the exchange.

HHS reported that 45% of Texas adults (age 19-64) with income under 138% of the poverty level were uninsured as of 2020, which was the highest level in the country (that population would become Medicaid-eligible if Texas were to expand Medicaid).

Federal poverty level calculator

Studies and reports studies show lagging health outcomes and a nationally high uninsured rate at least partly due to the decision against expanding Medicaid in Texas.  Some health care advocates are citing the state’s 17.4% uninsured to call for state legislators to consider Medicaid expansion in the 2021 session.

As the ACA was written, it called for Medicaid expansion in every state for legally present residents with incomes up to 133% of poverty (138%, with the built-in 5% income disregard). But in 2012, the Supreme Court ruled that states could not be penalized for opting out of expansion, and Texas has chosen to keep their pre-2014 Medicaid eligibility rules.

That means non-disabled adults without minor children are ineligible for Medicaid regardless of how low their income is. Parents with minor children are only eligible if the children are enrolled in Medicaid and if the household income doesn’t exceed approximately 14% of the poverty level (Texas uses a flat dollar amount for eligibility, but CMS converts that to a percentage) For a single parent with two kids, the parent is only eligible for Medicaid if the kids are on Medicaid and total household income doesn’t exceed $230/month.

Uncompensated care: Billons in federal funding each year

Political leaders in Texas have remained mostly uninterested in expanding Medicaid. Instead of pushing for legislation to expand Medicaid, Texas officials negotiated with CMS in an effort to secure ongoing funding to cover uncompensated care in the state. The state’s 1115 waiver was initially approved in 2011, and was intended to temporarily ensure funding for uncompensated care prior to the expansion of Medicaid. But after the Supreme Court’s 2012 ruling essentially made Medicaid expansion optional for states, Texas has rejected Medicaid expansion and instead continued to rely on the 1115 waiver’s federal funding to cover uncompensated care.

The Obama Administration had previously noted that uncompensated care funding would be largely unnecessary if states expanded Medicaid, but the Trump administration was more willing to work with states that had refused federal funding for Medicaid expansion.

Texas officials were successful in getting the Trump Administration to agree to a five-year extension of the state’s waiver for uncompensated care, and Texas is receiving $25 billion in federal funding, from 2018 through 2022, as a result. (The state’s 1115 waiver details are available here.) And in January 2021, the Trump administration agreed to extend the 1115 waiver out through 2030.

The Biden administration rescinded that extension soon after taking office. A few months later, however, a judge temporarily blocked the federal government from rescinding the 1115 waiver’s extension. But in September 2021, the federal government halted payments to the state over concerns about how Texas was funding its share of the cost. In March 2022, that funding — which amounts to $7 million per day — was restored.

That’s more than $2.5 billion in annual federal funding. But it’s worth noting that Texas would receive an estimated $6 billion in annual federal funding by expanding Medicaid, and the effect of that influx of federal money would have a ripple effect on the state’s economy that would amount to $100 billion over ten years. Expanding Medicaid would be a financial boon to Texas.

Who is eligible for Medicaid in Texas?

In addition to those with low incomes who are aged, blind, or disabled (receiving SSI benefits), the following populations are eligible for Medicaid in Texas:

  • Children aged 0-1: 198% of the federal poverty level (FPL)
  • Children aged 1-5: 144% of FPL
  • Children age 6-18: 133% of FPL
  • Pregnant women: 198% of FPL
  • Adults caregivers of children or adult relatives: 14% of FPL
  • Children are eligible for either Medicaid or CHIP if their household incomes are up to 201% of poverty

How does Medicaid provide financial assistance to Medicare beneficiaries in Texas?

Many Medicare beneficiaries receive Medicaid’s help with paying for Medicare premiums, affording prescription drug costs, and covering expenses not reimbursed by Medicare – such as long-term care.

Our guide to financial assistance for Medicare enrollees in Texas includes overviews of these benefits, including Medicare Savings Programs, long-term care coverage, and eligibility guidelines for assistance.

Texas has not accepted federal Medicaid expansion

  • 5,355,045 – Number of Texans covered by Medicaid/CHIP as of March 2022
  • 1,748,000 – Number of additional Texas residents who would be covered if the state accepted expansion
  • 771,000 – Number of people who have NO realistic access to health insurance without Medicaid expansion
  • $6 billion – Federal money Texas is leaving on the table in 2022 by not expanding Medicaid (source)

How do I enroll in Medicaid in Texas?

If you believe you may be eligible to enroll in Medicaid in Texas:

  • You can enroll through HealthCare.gov, either online or by phone at 1-800-318-2596. (Use this option if you’re under 65 and don’t have Medicare.)
  • You can enroll through the Medicaid website maintained by the Texas Health and Human Services Commission.
  • You can also download and print a paper application, or request that one be mailed to you, by using this page on the Texas Medicaid website.

Texas Medicaid enrollment numbers

If Texas were to expand Medicaid, it’s estimated that 1.7 million currently uninsured people would be newly eligible for coverage.  Of those people, 771,000 are currently in the coverage gap and have no realistic access to health insurance at all.  They don’t qualify for Medicaid, but their incomes are under the poverty level which means they are not eligible for subsidies in the exchange.

But despite the fact that the state has opted against using federal funds to expand Texas Medicaid, enrollment in Texas Medicaid/CHIP has grown by 27% — more than 1.1 million people — since 2013.

Much of that growth is due to the COVID pandemic and the Families First Coronavirus Response Act. That legislation, enacted in March 2020, provides states with additional federal funding (which every state accepted) but on the condition that nobody be disenrolled from Medicaid until after the COVID public health emergency (PHE) ends. The PHE has been extended through mid-October 2022, and could be extended again if the COVID situation warrants it.

Once the PHE ends, millions of Americans will have their Medicaid eligibility redetermined (some for the first time since early 2020) and some will lose their coverage as a result.

Prior to 2014, Texas had the highest uninsured rate in the country, and that is still the case. According to U.S. Census data, 22.1% of Texas residents were uninsured in 2013. It stood at 18.4% in 2019, which was still the nation’s highest uninsured rate.

Missing out on billions in federal funding

By refusing Medicaid expansion under the ACA, Texas has already missed out on billions in federal funding that would otherwise have flowed to the state to provide medical care for their low-income residents. And in addition, the state’s emergency rooms are providing $5.5 billion in uncompensated care each year, treating patients who don’t have health insurance (as noted above, the state is receiving about $2.5 billion in annual federal funding to cover uncompensated care). If Medicaid eligibility had been expanded, uncompensated care would have dropped considerably, so hospitals and business groups across the state have been pressuring lawmakers to relent on their opposition to Medicaid expansion.

Because Texas has refused to expand Medicaid, the federal government has warned the state that continued access to federal funding to help cover uncompensated care is in jeopardy (since Medicaid expansion would solve much of the uncompensated care problem). But Governor Greg Abbott has continued to reject Medicaid expansion, and described the federal government’s tactics as “coercive”

Since residents in states not expanding Medicaid still have to pay federal taxes, there has been a significant outflow from Texas residents to fund Medicaid expansion in other states. Over a decade (starting in 2014), Texas residents will pay $36.2 billion in federal taxes that will be used to pay for Medicaid expansion in other states.

This is by far the highest of any state — the next highest is Florida, where residents will pay just over $20 billion to pay for other states’ Medicaid expansion by 2022 (this data was compiled in 2014, when it was estimated that Texas would miss out on $65.6 billion in federal funding over a decade of refusing to expand Medicaid; updated information indicates that Texas is actually leaving $100 billion on the table over a decade by rejecting Medicaid expansion, once you account for the ripple effect that the additional federal funding would have on the state’s economy).

Texas Medicaid history

During the 2013 legislative session, Republican John Zerwas sponsored HB3791, which would have directed the state to craft a “Texas solution” to Medicaid expansion. But it did not pass. The bill called for reforming the state’s Medicaid system while also accepting federal funding to expand the program. It also included “personal responsibility” measures like copays and deductibles, and would have included premium assistance programs to help people purchase private insurance as a preferable alternative to traditional Medicaid.

But also in 2013, Republican lawmakers in Texas passed a measure that requires the state Health and Human Services Commission to receive approval from the legislature before any future Medicaid expansion decisions could be made.  So ultimately, even if a governor were to support Medicaid expansion, the decision rests with the Texas Legislature. This makes expansion very unlikely in the near future, given lawmakers’ general rejection of the idea.

As long as Medicaid eligibility continues to be unchanged from 2013 guidelines, the cost of uncompensated care in Texas hospitals is roughly $5.5 billion a year, and it’s largely paid by tax dollars and higher health insurance premiums for people who do have coverage, in addition to federal funding that the state has secured via an 1115 waiver.

Former Governor Rick Perry repeatedly rejected Medicaid expansion. During the 2014 Governor’s race, Republican Greg Abbott (who won by a significant margin) agreed with Perry and expressed his opposition to accepting federal funding to expand Medicaid (both men claimed that the eventual 10% of the cost that the state would pay by 2020 would be too much for the budget). Democratic candidate Wendy Davis was in favor of Medicaid expansion in Texas, but she lost the election.

In late 2014, Abbott expressed interest in Utah’s Medicaid expansion waiver (Utah ultimately ended up seeking federal approval to expand Medicaid only to the poverty level, but voters took the matter into their own hands in 2018, passing a ballot initiative that ultimately resulted in Utah fully expanding Medicaid as of 2020). And while that instilled hope that Abbott might soften his stance towards Medicaid expansion, he remains opposed to it.

It’s noteworthy that in November 2014, a 15-member board of medical professionals appointed by Governor Perry recommended that the state move forward with Medicaid expansion. The Texas Institute of Health Care Quality and Efficiency board has recommended Medicaid expansion as a solution to what they called an “unacceptable” number of people without health insurance in Texas.

State lawmakers only meet in odd-numbered years in Texas. Numerous bills were introduced in 2015 in an effort to expand coverage, but none were successful. While multiple bills were filed in 2019, they were not passed. And Medicaid expansion legislation in 2021 was also unsuccessful.


Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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Apply for Medicaid in Texas

You can enroll through HealthCare.gov or the state Medicaid website. You can enroll by phone at 800-318-2596.

Eligibility: The aged, blind, and disabled.  Also, parents with dependent children are eligible with household incomes up to 15% of FPL. Children are eligible for Medicaid or CHIP with household incomes up to 201% of FPL, and pregnant women are eligible with household incomes up to 198% of FPL.

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