Health Reform Will Add Coverage for 5 Million in Texas; State Health Spending to Grow by 10 Percent

National health care reform will help 5 million Texas residents obtain health insurance and increase health care spending by state government by about 10 percent when it is fully implemented in 2016, according to a new RAND Corporation study.

The increase in coverage will be caused by a jump in people enrolling in Medicaid and buying policies through a newly created state insurance exchange. Most of the rise in state spending is the result of increased Medicaid costs, according to researchers.

The estimates are from a study of the impact the major coverage provisions of the Patient Protection and Affordable Care Act will have on Texas that was conducted by researchers from RAND Health and sponsored by The Council of State Governments, a group that helps state leaders share ideas and insights.

The project examined five states chosen because they represented good geographic distribution and include both large and small states. The other states studied are California, Connecticut, Illinois and Montana.

"As states move forward preparing for the many provisions of health care reform, it's important for them to have an adequate forecast of what is ahead," said Christine Eibner, co-author of the study and an economist at RAND, a nonprofit research organization.

"We believe this information will help all states to be better prepared to respond to the challenges posed by the Patient Protection and Affordable Care Act," said Chris Whatley, Washington director of The Council of State Governments.

Researchers used a microsimulation model developed by RAND to estimate how health reform policies will affect the number of state residents who obtain or change sources of health of insurance, the types of plans they enroll in, and spending in the private and public sectors. The analysis does not account for the fact that approximately one-sixth of uninsured Californians are undocumented immigrants and not allowed to access the exchange or Medicaid.

The estimates are intended to help elected officials and policymakers anticipate the choices that will likely be needed by individuals, employers, insurance companies and governments as various provisions of health reform are implemented.

Key findings from the analysis of Texas include:

• The percentage of Texas residents with health insurance will increase from 72 percent to 94 percent by 2016 under the Patient Protection and Affordable Care Act. The number of uninsured non-elderly in Texas will be less than one-fourth of what it would be in absence of the law (1.4 million people uninsured compared to 6.5 million people uninsured).
• By 2016, about of 18 percent of non-elderly Texas residents will obtain their health coverage through an insurance exchange being created as a part of health reform.
• Enrollment in Medicaid will increase by 80 percent, with an additional 2.7 million Texas residents enrolled by 2016.
• The additional costs to the state would be about $580 million annually by 2016 and $2.8 billion annually in 2020. The cumulative increase from 2011 to 2020 will be nearly $10 billion.
• The majority of new Medicaid enrollees will be newly eligible, but increased enrollment of those previously eligible will cost the state more because the federal government will heavily subsidizes newly eligible enrollees.
• A slightly smaller percentage of Texas workers will be offered health insurance coverage from an employer after health reform is implemented.

The full study can be found at www.rand.org. Other authors of the study are David Auerbach, Sarah Nowak, Jeanne Ringel, Federico Girosi, Elizabeth A. McGlynn and Jeffrey Wasserman.

RAND Health, a division of the RAND Corporation, is the nation's largest independent health policy research program, with a broad research portfolio that focuses on health care costs, quality and public health preparedness, among other topics.