Updates to our Terms of Use

We are updating our Terms of Use. Please carefully review the updated Terms before proceeding to our website.

Wednesday, March 27, 2024 | Back issues
Courthouse News Service Courthouse News Service

Texas Sues Feds for Yanking Approval of Medicaid Plan

Texas claims President Biden is trying to force his “bloated model of government” on states and coerce them into expanding Medicaid coverage.

TYLER, Texas (CN) – Texas claims in a federal lawsuit the Biden administration has destabilized its health care system by revoking approval of an extension to its Medicaid plan, a move it says could rip a $35 billion hole in its budget.

Texas is one of just 12 states, all led by Republicans, that has declined to expand Medicaid coverage under the Affordable Care Act, which former Democratic President Barack Obama signed in 2010.

The Lone Star State is the longtime holder of the ignominious distinction of the nation’s highest uninsured rate. If it expanded Medicaid, an estimated 1.5 million adults would be eligible for joining the program and the federal government would pay 90% of their coverage costs.

The state has instead opted to go its own way. Since 2011, it has had a waiver agreement with the U.S. Centers for Medicare and Medicaid Services, or CMS.

Such deals allow states to be excused from some Medicaid requirements and give them flexibility to craft the program as they see fit to serve the needs of people who cannot afford private health insurance. Medicaid is jointly funded by states and the federal government. Around 4.2 million people are on Medicaid in Texas — including more than 3 million children, according to the Texas Tribune.

Texas’ Medicaid plan was extended in 2016 and 2017. On Jan. 15, in the final days of Donald Trump’s presidency, CMS extended it a third time through September 2030.

But on April 16, President Joe Biden’s acting CMS chief Elizabeth Richter sent Texas a letter rescinding approval of the extension. Richter claimed the agency had erred by fast-tracking Texas’ extension request.

Texas sued Richter and CMS over the move Friday in Tyler federal court. The Department of Health and Human Services and its Secretary Xavier Becerra are also named as defendants.

The state claimed an accelerated timeline was needed to ensure stability for Medicaid providers whose revenue suffered in 2020 as people worried about catching Covid -19 in medical clinics and hospitals chose not to seek treatment for non-emergency ailments. Texas cites a November 2020 survey in its lawsuit to back its claims many of its Medicaid providers are at risk of insolvency.

“The survey revealed that Covid-19 financially stressed many providers: 76% of respondents expressed that they were extremely or very concerned about Covid-19’s financial impacts. Of survey respondents, 42% reported reducing their operating hours; 23% reported closing locations or facilities,” the lawsuit states.

But in revoking the extension of Texas’ Medicaid plan, Richter said the Trump administration should not have exempted Texas from the normal notice-and-comment period in which the public can weigh in on changes contemplated in the extension of a state’s Medicaid plan, according to the lawsuit.

Though Texas will continue to receive $3.87 billion in Medicaid funding in 2021 and 2022 under its current waiver agreement, it’s set to expire in October 2022.

The state says the timing of Richter’s letter also prevented the Texas Legislature from crafting a legislative solution this session to CMS’ decision. She sent it with just 45 days remaining in the session, which ends May 31. The Legislature convenes every other year for 140 days, so unless Governor Abbott calls a special session, the issue would have to be put off until the next session starts in January 2023.

“Federal authorities may not topple a state’s Medicaid system as a child might a sandcastle,” Texas says in the complaint.

The state claims the Biden’s administration’s move has particularly disrupted part of its Medicaid program it uses to pay incentives to hospitals and other providers for implementing preventative care programs. With that incentive program set to expire Sept. 30, Texas had prepared a replacement in its waiver extension negotiations with the Trump administration. But now that the Biden administration has revoked the extension, Texas says, it is at risk of losing billions in funding for mental-health, diabetes and other services for vulnerable populations starting this fall.

The state seeks a declaration the Biden administration cannot rescind the extension of its Medicaid plan, calling it an unconstitutional attempt to coerce it into expanding Medicaid under the Affordable Care Act, better known as Obamacare.

Texas Attorney General Ken Paxton, a Republican, said in a statement the ACA Medicaid expansion would be a disaster for the state, and is an effort by Biden to thrust his “bloated model of government on everyone.”

“The Biden administration cannot simply breach a contract and topple Texas’s Medicaid system without warning. This disgusting and unlawful abuse of power aimed at sovereign states must end,” he added.

A CMS spokesman said it does not comment on pending litigation.

Follow @cam_langford
Categories / Government, Health, Politics

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Loading...