Biden officials rescind Texas Medicaid waiver approved by Trump

The Biden administration on Friday rescinded a Medicaid waiver for Texas approved in the final days of the Trump administration, throwing into doubt billions of dollars of federal funding and potentially adding to pressure on the state to expand Medicaid under ObamaCare.

A letter from the Centers for Medicare and Medicaid Services to Texas on Friday cited procedural grounds for revoking the waiver, noting that the Trump administration did not go through a public comment period before approving it in January.

The waiver provides billions of dollars in federal funding for Texas, some of which is used for “uncompensated care” funding that reimburses hospitals for providing care to uninsured people.

Advocates of Medicaid expansion under the Affordable Care Act have long argued that it would make much more sense to provide health insurance for people in the first place, through Medicaid, rather than leaving them uninsured and then reimbursing hospitals for their care.

But Republican leaders in Texas have long resisted expanding Medicaid.

Texas Gov. Greg Abbott (R) on Friday blasted the Biden administration’s decision to revoke the waiver.

“By rescinding this waiver extension, the Biden administration is obstructing healthcare access for vulnerable Texans and taking away crucial resources for rural hospitals in Texas,” Abbott said.

Joan Alker, a Medicaid expert at Georgetown University, said the need for the waiver funding would be greatly reduced if the state instead covered people through accepting the Medicaid expansion.

“A lot of these people don’t need to be uninsured anymore now that the state can do Medicaid expansion,” she said. 

Democrats tried to further incentivize the remaining 12 states to expand Medicaid in the American Rescue Plan signed into law by President Biden in March. That would provide an additional 5 percentage points in the federal share of Medicaid funding for two years after expanding the program.

A CMS spokesperson said that while the waiver approved under former President Trump did not follow the proper process, “CMS remains committed to working with states—as it always has—on solutions that can meet the public’s expectations for transparency while strengthening Medicaid’s aims.”

Alker said that similar waiver funding for Florida, also approved at the end of the Trump administration, could be next to be revoked. Texas and Florida are the two largest states declining to expand Medicaid. More than 700,000 uninsured people in Texas fall into the “coverage gap” and could gain coverage if the state expanded Medicaid, according to the Kaiser Family Foundation.

“Both Florida and Texas’s waivers are a lot of money for states that have not expanded Medicaid,” she said.

Eliot Fishman, a former Obama administration Medicaid official now at the health care advocacy group Families USA, said the Trump administration skipping the public comment period was reason enough to revoke the waiver.

But he also said the state should expand Medicaid. “Texas has the highest uninsured rate by a significant amount,” he said.