Ted Shaw Blog
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Ted Shaw is the CEO and president of the Texas Hospital Association.

This column was originally published in the Houston Medical Journal on Feb. 18, 2021.

As COVID-19 vaccines continue to flow to patients across the state, Texas health care providers have another reason to be hopeful for the future. The Centers for Medicare & Medicaid Services recently approved a monumental 10-year extension of a Medicaid waiver that provides critically needed stability to the health care safety net in Texas. 

Last year, Texas hospitals incurred more than $4.6 billion in uncompensated care costs. Then, the ongoing pandemic caused many Texans to lose their jobs and their employer-sponsored health care coverage. As rates of uninsured climbed in Texas, the demand for intensive, lifesaving health care services grew as well. While hospitals and health care professionals in Texas are no strangers to providing under-reimbursed and unreimbursed care, the financial strains from the pandemic added more uncertainty and volatility to providers’ already precarious financial circumstances. But many hospitals, doctors, ambulance providers, behavioral health providers and others will have meaningful financial relief with the extension of Texas’ Medicaid 1115 Waiver. 

The state and federal agreement extends the life of the current waiver for 10 years and creates opportunities to help replace a funding stream that is phasing out. Specifically, the waiver extension continues the existing uncompensated care pool of funding that helps offset some of the unreimbursed costs hospitals and other providers incur for treating Medicaid beneficiaries and the uninsured. Under the extension, public behavioral health providers will have a separate designated pool of uncompensated care funding for a similar purpose. The waiver also transitions a prior program into several new directed payment programs that would incentivize higher quality care, bring payment closer to the cost of services provided and ensure funds stay in the health care safety net. 

Without funding from the waiver, hospital doors would shutter, and many Texas residents would lose access to emergency, lifesaving care. The extension is a historic success for the state, its health care providers and the health care safety net. Texas hospitals and other providers look forward to working with the 87th Legislature to build on the success of the waiver extension and identify a budget-neutral solution to address the state’s ongoing coverage gap and rising rate of uninsured. 

Since its inception, Texas’ Medicaid 1115 Waiver has been a building block to coverage. It is not a coverage program. Instead, waiver funding helped offset some of providers uncompensated care costs and incentivized health care providers to transform and innovate health care delivery to better meet their unique needs of their communities. While the funding focused on health care delivery transformation was not extended and expires October 2021, providers will work to maintain those innovative health care delivery models through other means, including upcoming directed payment programs. 

Still, uninsured Texans need reliable access to outpatient and community-based health care services to maintain and ultimately improve their baseline health. More than 18% of Texans were uninsured in 2019—twice the national average of 9.2%. A 2019 study by the Texas Alliance for Health Care warned that Texas’ high rate of uninsured could hurt the state’s economy long term. The lack of health insurance keeps many from seeking routine and preventive health care services. Waiting to treat a chronic condition until it requires acute, emergency care is an inefficient care model that tends to be more costly than managing it early on in a more clinically appropriate care setting. 

Hospitals are committed to working with state lawmakers, other providers and patient advocates to ensure our health care system is efficient and cost effective and that patients are healthier and can contribute to a more productive workforce. The solution to both of those goals begins with health care coverage.

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