The 87th Texas Legislature

Apr 8, 2021

Dear friend –

We’re now two weeks into the 87th Texas Legislative Session. The Capitol is abuzz with excitement, and maybe with a bit of intrigue, too. Possibilities abound.

What’s new: My team and I begin this new year in a new Capitol office, and with a new set of committee assignments. The Lieutenant Governor appointed me to serve as Vice-Chair of the Senate Committee on Administration, and on Business and CommerceJurisprudence, the Senate Special Committee on Redistricting, and Water, Agriculture, and Rural Affairs. These are weighty assignments, and I embrace them eagerly and with high aspirations.  

What’s continuing: My work in the healthcare space, meanwhile, will continue unabated. I have filed several healthcare bills already, none larger or more important than the quest to forge a bipartisan agreement to bring to Texas expanded Medicaid coverage under the Affordable Care Act. Please take a moment to read the Policy Spotlight: “Live Well Texas Program”, below.

Top response from my January 19th Town Hall: “I had no idea state government did so much.” Missed it? Curious? You can watch the whole show here. Warning: I talk too fast. There was a lot to cover.

Podcast fans: Jason Whitely and Jason Wheeler brought me onto their smart and entertaining show Y’all-itics last week, for a quick look at a few of the big items looming ahead for the session – the state budget, the startling scope and scale of benefits from Medicaid expansion, schools and property tax, marijuana, partisanship, and more. Catch the segment here, or for a quick sense of the show, listen to this 1-minute clip.

Want to follow state politics in real time? You can watch committee hearings as well as Senate and House floor proceedings, and even track legislation in progress, at

Policy Spotlight: The Live Well Texas Program

The opportunity. We can bring health insurance to an estimated million Texans while adding $2.5 billion dollars to state general revenue without raising taxes. At the same time we can provide support to rural and urban health systems, stabilize family finances, improve public health, decrease ER visits, relieve pressure on local property taxes, improve racial equity, encourage employment and create jobs.

All this results from expanding health insurance coverage under the Affordable Care Act. But despite the benefits, ACA expansion still faces significant obstacles in Texas – political, practical, and philosophical. To overcome these obstacles, we’ll have to address long-standing and valid conservative concerns, while still meeting the challenge to broadly expand access to healthcare. That’s the aim of my Senate Bill 117, the “Live Well Texas” program.

The Live Well Texas program is neither traditional Medicaid nor traditional Medicaid expansion. In fact, it’s a waiver of substantial elements of traditional Medicaid requirements. The program draws down federal Medicaid dollars to provide coverage to the ACA “expansion” population (non-elderly, non-disabled, non-pregnant adults age 19-64 who earn less than 138% of the federal poverty level), but gives Texas substantially more control and discretion over how we administer and spend those funds, over how we work with providers, payers, and participants. Importantly, the program incorporates approaches that have proven effective in other states with Republican leadership. As with other comprehensive bills, SB 117 also provides a flexible framework within which legislators can change, add, subtract, re-shape, and refine the various elements and operations of coverage expansion.

What about the money? We’re good on the money. Because it draws down federal Medicaid dollars at a federal-state match rate of $90-$10 (instead of $60-$40 under standard Medicaid), a Texas ACA expansion generates more in savings and revenue ($1.4B) than it introduces in new costs ($1.3B). See, among other sources, An Open Letter to Elected Officials, November 9, 2020 by Ray Perryman, Laura Dague, Randy Fritz, and Vivian Ho: “[T]he probable net static fiscal impact of implementing a federally funded expansion in Texas would be positive and in the range of $75 million to $125 million during the 2022-2023 Biennium.”

And that’s just the static component. Economic stimulus from an additional $11B in federal funding is expected to generate additional dynamic state revenue of $2.5B, and local revenue of $2.0B – in just the first fiscal biennium.

Finally, if – as virtually all other expansion states have done – Texas were to implement any kind of provider or plan assessments, fees, or taxes, the resulting revenue would be available for other state needs.

$90-$10 or failure. The money math only works with a $90-$10 federal-state match. Calls for “alternatives” to ACA expansion propose exceedingly narrow, incremental, but politically attractive programs. They cover a small fraction of the expansion population, generally draw funding at $60-$40, and depend on local property taxes. The money math doesn’t work, and they’ll get a negative “fiscal note”, which in the Legislature means they impose net cost to the state budget, which in turn means that they won’t become law. In practical effect, then, there are only two options: $90-$10 or failure.

Does expansion mean less efficiency in government? No. The present structure of healthcare assistance programs is fragmented, comprising a large and complex patchwork and featuring inconsistencies and contradictions and leaving large gaps. To an appreciable extent, ACA expansion can streamline processes and consolidate operations, resulting in greater, not lower, government efficiency.

An overview of Live Well Texas. Some key elements of the plan include:

  • Health savings accounts. Participants are enrolled in a high deductible health plan. The state initially funds the account in an amount equal to the (high) deductible or, in the case of the plan option for advanced benefits, in the deductible amount minus the amount the participant will be expected to contribute to their own health savings account. For low-wage workers, the participant’s contribution may be funded by the participant’s employer (incentivizing both employment and employer participation) or by charitable organizations (calling upon and enabling the participation of the community).
  • Provider participation incentive: raises Medicaid reimbursement rates to parity with Medicare rates. Higher reimbursement rates correlate to higher provider participation.
  • Utilizes Texas’ existing MCO model, including value-based payment systems.
  • Creates incentives for healthy behavior modifications. Insurers (MCOs) can reward participants for healthy behavior modifications, like smoking cessation and chronic disease management, by making extra contributions to their HSA accounts.
  • Medicaid residency and citizenship requirements apply to plan eligibility.
  • Encourages and facilitates employment. The plan refers unemployed and under-employed participants to work-search and job-training programs provided by the state. Participants who do secure employment and then, as a result of their additional income become ineligible for the program, may continue to draw upon their HSA account funds while they obtain new insurance, thus eliminating what otherwise might be a disincentive for seeking employment.
  • Simplifies eligibility. Uses a single, consolidated application process for all state health benefit programs, including current Medicaid and the Live Well Texas program. Once an applicant is determined to be eligible, eligibility continues for 12 months.
  • Continuity of enrollment, and maximum federal funding for pregnant women, parents and caregivers. To the extent standard Medicaid for pregnant women might (now or in the future) provide benefits beyond what the Live Well Texas program offers them, women who become eligible for traditional Medicaid by virtue of pregnancy will receive all standard Medicaid benefits in addition to their benefits under their plan. The program treats parents and caregivers likewise. This ensures that participants receive all benefits that the state has specifically designed for pregnant women and caretakers. At the same time it incentivizes them to remain enrolled in the Live Well Texas program, which for the state means federal funding at $90-$10 instead of $60-$40 (or other less favorable rate) under traditional Medicaid.
  • Self-destruct: if the federal government were to decrease the $90-$10 match rate, the program ends.

Expansion under the ACA is stable. With 38 states having opted to expand under the ACA, representing 228 million people and 53 million expansion enrollees, we can expect that Congress will preserve it, just as Congress continues to provide funding for transportation and education.

More to do. Coverage expansion under the Live Well Texas program (or other ACA $90-$10 expansion model) comprises only part of the exciting range of healthcare initiatives being pursued at this moment. Some will advance this session (pushing for a few of my own), and some will have to wait for other legislative sessions. But ACA coverage expansion is by far the most comprehensive, powerful, and economically advantageous measure available to Texas.