Skip to main content
Home

Main navigation

  • Centers & Programs
    • Centers
      • Center for Energy Studies
      • Center for Health and Biosciences
      • Center for the Middle East
      • Center for Public Finance
      • Center for the U.S. and Mexico
      • McNair Center
      Center for Energy Studies
      Providing new insights on the role of economics, policy and regulation in the performance and evolution of energy markets.
      More Details
      The globe at night, lights in populated areas illuminated
      Center for Health and Biosciences
      Advancing data-based policies that promote health and well-being in the U.S. and around the world.
      More Details
      Female healthcare worker lifts finger to press digital buttons featuring topical iconography
      Edward P. Djerejian Center for the Middle East
      Developing pragmatic policy approaches to the region’s enduring political, economic and societal concerns.
      More Details
      Topographic map of Middle East
      Center for Public Finance
      Delivering research and analysis on the effects of major U.S. fiscal policies.
      More Details
      Stack of coins with mathematical figure overlays
      Center for the U.S. and Mexico
      Strengthening the binational relationship by addressing major concerns on both sides of the border.
      More Details
      Textured flags of America and Mexico
      McNair Center for Entrepreneurship and Economic Growth
      Providing actionable policy analysis and recommendations that aim to expand the economy through private enterprise.
      More Details
      Professionals gather around a large table with laptops, printed documents and coffee cups for a business meeting
    • Programs
      • China Studies
      • Drug Policy
      • International Economics
      • Presidential Elections
      • Religion & Public Policy
      • Science & Technology Policy
      • Space Policy
      China Studies
      Analyzing the influence of the transnational circulation of people, technologies, commodities and ideas in China.
      Read More
      Person walks alongside large banner with Chinese characters
      Drug Policy
      Pursuing research and open debate to develop pragmatic drug policies based on common sense and driven by human rights interests.
      Read More
      Marijuana
      International Economics
      Studying timely issues in global economic policy as well as developmental policy in foreign countries.
      Read More
      International paper currencies stacked together, showing range of colors and styles
      Presidential Elections
      Offering nonpartisan analysis of elections to better understand the changing dynamics of presidential campaigns.
      Read More
      An assortment of campaign buttons from a variety of US elections and political pursuits are displayed in a collage
      Religion and Public Policy
      Exploring how religion and cultural factors interact with public policy issues.
      Read More
      A worn path stretches between rows of olive trees
      Science and Technology Policy
      Addressing a broad range of policy issues that affect scientists and their research.
      Read More
      A scientist picks up test tubes from a rack.
      Space Policy
      Focusing on U.S. space policy and the future of space travel.
      Read More
      The International Space Station (ISS) orbits the Earth at sunrise
  • Events
    Teen Depression
    Center for Health and Biosciences | Child Health Policy
    Tue, Jun. 06, 2023 | 4 pm - 5 pm
    Baker Briefing: America’s Youth in Crisis — How Policy Interventions Can Help See Details
    Textured flags of America and Mexico
    Center for the U.S. and Mexico | Mexico Forum
    Wed, Sep. 13, 2023 | 6 pm - 8:30 pm
    Center for the US and Mexico 10th Anniversary Dinner See Details
  • Experts
    • Biomedical Research
    • Child Health
    • China
    • Conflict Resolution in the Middle East
    • Domestic Health Policy
    • Drug Policy
    • Energy
    • Entrepreneurship and Economic Growth
    • Global Health
    • Health and Biosciences
    • Human Rights and Refugees
    • International Economics
    • Islam and Politics
    • Latin American Energy
    • Middle East
    • Political Economy of the Arab Gulf
    • Presidential Elections
    • Public Finance
    • Religion and Public Policy
    • Science and Technology
    • Space Policy
    • Texas Politics
    • U.S. and Iran
    • U.S. and Mexico
    • See All Experts
    • Experts in the News
  • Support
    • Join the Baker Roundtable
      Join the Baker Roundtable
      Learn more about the Baker Institute’s membership forum, which supports the mission of the institute and offers members exclusive access to experts and events.
      Read More
      RT
    • Major Gifts
      Major Gifts
      Major gifts provide the funds necessary for the Baker Institute to explore new areas of study and research, and expand current programs.
      Read More
      Wallace S. Wilson meeting with former British Prime Minister Tony Blair
    • Endowments
      Endowments
      Endowment gifts provide the Baker Institute with permanent resources that support research programs, fellows and scholars.
      Read More
      Pictured from left are William Martin, Katharine Neill Harris, Ambassador Edward Djerejian, Alfred C. Glassell, III, and Pam Lindberg
    • Planned Giving
      Planned Giving

      Plan a gift that will ensure lasting, meaningful support for policy programs important to you.

       

      Read More
      meeting
    • Corporate Support
      Corporate Support
      Corporations can become involved with the institute in a number of ways and see the benefit from the research conducted by our fellows and scholars.
      Read More
      Wide shot of the Doré Commons during a Shell Distinguished Lecture Series event featuring Wim Thomas
  • About
    • People
      People
      Learn more about the Baker Institute's leadership and get contact information for the administrative staff.
      Read More
      Secretary James A. Baker, III, stands with a portion of the Berlin Wall, outside of Baker Hall
    • Student Opportunities
      Student Opportunities
      Through the internships on campus and beyond, Rice students can explore careers in public policy, or simply become better informed about important issues of the day.
      Read More
      Amb. Edward P. Djerejian speaks with students outside Baker Hall
    • Annual Report
    • Podcast: Baker Briefing
      Podcast: Baker Briefing
      Baker Briefing is a weekly podcast that tackles the most critical foreign and domestic policy issues of the day in conversations with experts at the Baker Institute.
      Read More
      Logo for the Baker Briefing Podcast (Square)
    • Contact
      Contact Us
      Complete a form for event, media or other inquiries, and get directions and parking information for the Baker Institute.
      Read More
      The front of Baker Hall, from across the plaza, with fountain in foreground
  • Contact
  • Research
    • Economics & Finance
      Economics & Finance
      Read More
    • Energy
      Latest Energy Research
      Summary on Latest Energy Research
      Read More
    • Foreign Policy
      Foreign Policy
      Read More
    • Domestic Policy
      Domestic Policy
      Read More
    • Health & Science
      Health & Science
      Read More
    • All Publications
  • Facebook
  • Youtube
  • Twitter
  • Linkedin
  • Economics & Finance
  • Energy
  • Foreign Policy
  • Domestic Policy
  • Health & Science
  • All Publications
Center for Health and Biosciences | Domestic Health Policy Analysis | Commentary

Public Medicaid Managed Care Organizations are Under Attack in Texas

April 24, 2023 | Vivian Ho
Texas Capitol

Table of Contents

Author(s)

Headshot of Vivian Ho
Vivian Ho
James A. Baker III Institute Chair in Health Economics
Read More

Share this Publication

  • Facebook
  • Twitter
  • Email
  • Linkedin
  • Print This Publication

Tags

Medicaidhealth careHealth care policyhealth insuranceTexas

Medicaid plays an outsized role in Texans’ health care, providing 5.4 million low-income individuals (mostly children and the elderly) with health insurance. Yet two new bills recently introduced in the Texas House and Senate — House Bill 2401 and Senate Bill 651 — could jeopardize the care received by patients with Medicaid. If passed, these bills would remove the guarantee that county-owned health insurance plans that meet state regulatory criteria are allowed to offer Medicaid plans. Such action would threaten the ability of county-owned plans to continue to operate, reduce the quality of Medicaid services and prevent money from being invested back into Texas communities.    

Medicaid Coverage Under Current Texas Law

Competing health insurance companies operate managed care organizations (MCOs), which provide Medicaid coverage to beneficiaries and negotiate with health care providers to deliver care. MCOs earn profits when the annual premium paid by the state exceeds their health care costs. Medicaid beneficiaries choose between plans based on their network of providers and publicly reported quality ratings.

Not all insurance companies are allowed to offer Medicaid policies. Insurers must apply to the state and meet criteria in the government’s request for proposals, after which the state certifies a limited number of MCOs to serve each local market. County hospitals in Dallas, Houston, San Antonio and El Paso operate private companies that offer Medicaid plans to those who qualify. These four public MCOs comprise 11% of the Texas market (by revenue). In contrast, for-profit insurers such as Amerigroup, UnitedHealthcare and Molina control 73% of the Medicaid market. These for-profits are publicly traded national companies headquartered outside of Texas.

Current law requires the state to guarantee Medicaid contracts to county-owned insurance companies that meet the government’s contractual requirements to sell Medicaid policies. These organizations receive preferential treatment, because they invest any profits earned back into the communities they serve. For example, Harris Health’s Community Health Choice has committed $3.4 million to help the Harris Center improve access to inpatient mental health. In contrast, for-profit insurers’ first obligation is to their shareholders. Profits are more likely to be returned to shareholders in dividends or invested in capital projects that expand market share.

How HB 2401 and SB 651 Would Hurt Texans  

Lobbyists representing for-profit insurers have convinced certain Texas legislators to file HB 2401 and SB 651, which would remove the guarantee that county-owned insurance plans that meet state regulatory criteria be granted permission to offer Medicaid plans. Adopting this legislation would endanger the likelihood that county-owned plans will continue to operate, despite the fact that they have consistently tied or out-performed the for-profit companies in the Texas Health and Human Service Commission’s report card rating system.

Losing any one of these county-owned plans means that more dollars earned by for-profit insurers will flow into the pockets of investors rather than to Texas communities. Furthermore, the elimination of county-owned insurers threatens the quality of Medicaid services. Recent research found that nationally the lowest-spending (i.e., highest-profit) Medicaid insurers tend to be for-profit companies that restrict access to a broad set of services, and patients covered by these low-spending insurers were more likely to be hospitalized for avoidable reasons.

Even more worrying, losing county-owned Medicaid plans reduces the subsidy that Texas receives from the federal government to pay for Medicaid. County-owned plans contract with their own hospital to care for Medicaid patients. For-profit plans have been known to exclude county hospitals from their provider networks in order to avoid the sickest (most costly) low-income patients, who gravitate toward public hospitals for care. Yet revenues earned by county hospitals are recognized under Medicaid rules as state contributions to the program, which are more than matched by federal dollars. For example, the $253 million earned by the four largest county health care systems led to $611 million in additional federal money paid to all 96 hospitals in Texas that cared for low-income patients in 2022.

Conclusion: Say “No” to HB 2401 and SB 651

Shifting more Medicaid patients to for-profit insurers means that Texas tax payers will pay more for Medicaid costs, while the federal government pays less. Don’t let for-profit insurers fool you into thinking that preferential treatment for county insurance plans dampens healthy competition in the Medicaid market. Those of us fortunate enough to have insurance through our job have become jaded with for-profit insurers. How can we trust for-profit plans to “do the right thing” for the least fortunate in our communities?

 

This material may be quoted or reproduced without prior permission, provided appropriate credit is given to the author and Rice University’s Baker Institute for Public Policy. The views expressed herein are those of the individual author(s), and do not necessarily represent the views of Rice University’s Baker Institute for Public Policy.

© 2023 by Rice University’s Baker Institute for Public Policy
  • Print This Publication
  • Share
    • Facebook
    • Twitter
    • Email
    • Linkedin

Related Research

Artificial intelligence
Center for Health and Biosciences | Policy Brief

Toward a Comprehensive Brain Deal to Harness the Potential of Artificial Intelligence

Read More
Small child reaches into drawer with firearm
Center for Health and Biosciences | Report

Understanding the Risk of Firearm Violence in the Houston Area

Read More
Table full of fresh vegetables and produce
Center for Health and Biosciences | Research Paper

Good Food is Vital for Brain Health So We Must Change the Food Industry

Read More
  • Facebook
  • Youtube
  • Twitter
  • Linkedin
  • Donate Now
  • Media Inquiries
  • Membership
  • About the Institute
  • Rice.edu
Contact Us

6100 Main Street
Baker Hall MS-40, Suite 120
Houston, TX 77005

Email: bipp@rice.edu
Phone: 713-348-4683
Fax: 713-348-5993

Baker Institute Newsletter

The email newsletter of Rice University's Baker Institute for Public Policy provides a snapshot of institute news, research and upcoming events.

Sign Up

  • © Rice University's Baker Institute for Public Policy
  • Web Accessibility
  • Privacy Policy