In his letter to Health and Human Services Secretary Kathleen Sebelius rejecting the expansion of Medicaid under the Affordable Care Act, Texas Governor Rick Perry tells a whopper. Expanding Medicaid, he writes, would “threaten even Texas with financial ruin.”
Texas has the highest rate of uninsured residents in the country (25 percent), and it stands to enroll some 1.8 million new Medicaid recipients through the expansion. These are some of the poorest people in America, making less than 133 percent of the federal poverty level (just $31,000 a year for a family of four). In the first six years of the expansion, from 2014 to 2019, the total cost of insuring these Texans would be about $55 billion—not an inconsiderable sum. But the federal government would pay more than 95 percent of that amount; Texas’s share would be just $2.6 billion. That’s not chump change—but threaten Texas with financial ruin? Not by a long shot.
What does threaten Texas with financial ruin is the fact that it has some of the most regressive, insane tax policies in the nation. According to Matt Gardner, executive director of the Institute on Taxation and Economic Policy (ITEP), Texas is one of nine states without any broad-based state income tax. Back in 2008, the Center for Public Policy Priorities calculated that Texas could raise $7 billion a year through a modest personal income tax comparable to what its neighbor Kansas had at the time (6.45 percent for individuals making more than $30,000 a year). If Texas collected that amount annually through a personal income tax during the first six years of the expansion, it would raise $42 billion. That would pay for its share of the Medicaid expansion more than sixteen times over. (I suspect the state’s teachers, social workers, firefighters, police and other public employees would have some ideas on how to spend the surplus.)