A federal safety net funds health care for uninsured Texans. Time is running short to negotiate its renewal.

To understand how the Texas health care safety net for uninsured residents works in 2019, consider the Western Hills mental health clinic in an impoverished neighborhood in West Fort Worth.
The outpatient clinic, occupying a modest space in a red-brick strip mall, serves about 1,000 people a month, mostly patients with low incomes and without health insurance. Psychiatrists and nurse practitioners prescribe medication and ask questions — do you have a job? stable housing? — to see if they can help the patient sign up for other services. For complicated cases, the clinic dispatches specialists who work in patients’ homes.
The clinic is primarily paid for with a pot of federal and local funding with a roughly $5 billion annual value that makes up a significant chunk of the state’s health care budget. The clinic is run by a government entity, MHMR of Tarrant County, which uses local tax dollars and some state funding to leverage about $20 million each year from the federal government, according to its chief executive, Susan Garnett. The federal funding makes up more than 10 percent of the mental health authority’s roughly $160 million annual budget. It’s one of hundreds of projects in Texas that receives the federal funding.
“I believe these dollars have both saved and improved the lives of people who have serious mental illnesses and struggle with poverty and uncertain housing,” Garnett said.
But advocates for the state’s nearly 5 million uninsured residents worry that some of that funding could be in jeopardy. The 1115 waiver, as it’s known, is a $25 billion, five-year agreement between Texas and the federal government. Although much of the waiver funding doesn’t expire until 2021, a broad coalition of doctors, hospitals and patient advocates is sounding the alarm about its future. If state lawmakers want the federal government to continue footing much of the tab for the state’s health care safety net, they say, the Texas Legislature needs to do something this legislative session to send a clear signal to the Trump administration that the funding should continue.
Because the Texas Legislature only convenes every two years, proponents of the funding say lawmakers must act with urgency. They want lawmakers, who have said little in public about the issue, to order the Texas Health and Human Services Commission to begin negotiating a new waiver.
“If they would direct HHSC to go with a full-court press to get as much money as we can, as creatively as we can, HHSC might do that,” said Elena Marks, president of the Houston-based Episcopal Health Foundation. “But HHSC is not going to do that without them being told.”
For Garnett, if the federal funding went away, “I don’t know how we could possibly consider continuing to operate a clinic there. We literally couldn’t afford to.”
A spokeswoman for the Texas Health and Human Services Commission downplayed the urgency of a new round of waiver negotiations and said the agency could negotiate an extension on its own, without explicit direction from Abbott or the Legislature. The agency “is working to ensure the smooth operation of the current iteration” and “will have an opportunity in September 2021 to ask for another extension,” spokeswoman Christine Mann said in an emailed statement.
Health care advocates are pushing for a budget rider this year that would require the health agency to do so, but lawmakers have not included any such language in the spending plan.
A spokeswoman for the Senate’s chief budget writer, state Sen. Jane Nelson, R-Flower Mound, did not respond to a request for comment. A spokeswoman for state Rep. John Zerwas, R-Richmond, said Wednesday he was unavailable for comment.
The 1115 waiver funds serve two main purposes: reimbursing hospitals for the “uncompensated care” they provide to poor patients without health insurance, and funding innovative health care projects, many of them in the mental health field, that serve low-income Texans.
The Obama administration first approved Texas’ waiver in 2011, after the passage of the Affordable Care Act. At the time, the sweeping federal health law was going to require states to extend publicly funded insurance coverage to poor adults in a process known as Medicaid expansion. The Obama administration viewed the 1115 waivers it granted to states, in part, as a way of gearing up the states’ capacity to serve an influx of newly insured people — and in Texas, with the nation’s highest rate of uninsured residents, there were potentially millions of them.
But a few months after the signing of the Texas waiver, a U.S. Supreme Court ruling gutted the Medicaid expansion portion of the health law. States were no longer required to offer Medicaid coverage to their poor populations, and Texas’ Republican leadership stood fast against expanding Medicaid, which they derided as a bloated entitlement program.
Still, Republicans from Gov. Greg Abbott down have worked behind the scenes to maintain the waiver funding. That led to conflict with the Obama administration, which told Texas it would be more cost-effective to provide health coverage via Medicaid expansion rather than reimburse the hospitalization costs of the uninsured. Abbott did not budge on Medicaid expansion, and in 2017, an ascendant Trump administration nonetheless approved Texas’ request for an extension. The governor touted it as evidence he had delivered on his promise of “preserving access to care without expanding a broken Medicaid system under Obamacare.”
Two years later, advocates say the future of the waiver beyond 2021 is less certain. The Trump administration this week proposed a spending plan that would cut government payments to hospitals and further limit eligibility for Medicaid coverage.
“I think we all have this anxiety about getting to the cliff and then trying to do something,” said Doug Curran, president of the Texas Medical Association and a proponent of the waiver renewal. “These federal dollars are our federal dollars, and we ought to be using them.”
It’s not just large, public hospitals in big cities that depend on the waiver, said John Henderson, president of the Texas Organization of Rural and Community Hospitals. If the waiver funding weren’t renewed, he predicted a wave of hospital closures would result.
“From a rural hospital’s perspective, [the waiver funding] makes a big red number on their financial statements a smaller red number, which ultimately helps them delay or defer what has become a closure crisis in Texas,” he said.
Garnett, of MHMR of Tarrant County, said she remained optimistic that the state and federal government would reach a deal to preserve the safety net. In addition to paying for the Western Hills clinic, which opened in 2013, waiver funding has helped the mental health authority hire specialists and expand services to new patients.
“Because it is such a significant proportion of the services that are provided … I really believe we’re going to get this figured out,” she said. “I’m not sitting around planning for the doomsday scenario.”
Disclosure: Episcopal Health Foundation and the Texas Medical Association have been financial supporters of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune’s journalism. Find a complete list of them here.
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