Perry Pressured by Texas Businesses Over Medicaid Refusal

Photographer: Patrick Semansky/Bloomberg

While eight Republican governors have accepted the Medicaid expansion since November, opposition from Texas Governor Rick Perry and other Texas politicians remains intense. Close

While eight Republican governors have accepted the Medicaid expansion since November,... Read More

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Photographer: Patrick Semansky/Bloomberg

While eight Republican governors have accepted the Medicaid expansion since November, opposition from Texas Governor Rick Perry and other Texas politicians remains intense.

Chambers of commerce representing companies such as Exxon Mobil Corp. (XOM) and Kimberly-Clark Corp. (KMB) are challenging Texas Governor Rick Perry and lawmakers to expand health care for the poor in the state with the highest percentage of uninsured people.

The chambers of five cities are sending lobbyists to press Republican leaders to increase Medicaid coverage under President Barack Obama’s health-care law.

Businesses are often allied with Perry, a failed contender for last year’s Republican presidential nomination. The chambers, however, argue Texas shouldn’t pass up $100 billion over the next decade to cover 1.5 million adults. Obama’s plan would pay all costs until 2016, then the state’s share would gradually increase to 10 percent in 2020. Perry says that’s too expensive.

“This may be the only time that we have taken an actual formal position that is opposite that of the governor,” said Richard Dayoub, chief executive officer of the El Paso Chamber of Commerce. “I don’t know of any issue that has created so much concern across the state and has amassed so much support across party lines and throughout the business sector.”

Chambers supporting expansion in Dallas, San Antonio, Fort Worth and Arlington include members ranging from publicly traded companies to small shoe stores and family restaurants, many of them strained by health costs.

‘Socialized Medicine’

Employer-provided insurance costs an additional $1,800 a year per worker thanks to uncompensated hospital care, according to the Center for American Progress, a Washington research group started by a former aide to President Bill Clinton.

Still, while eight Republican governors have accepted the Medicaid deal since November, Texas opposition remains intense.

U.S. Senator Ted Cruz’s first bill filed in Congress called for repealing every word of the health overhaul, while Perry told Republican activists in Washington on March 14 that it is “one large, incremental step toward single-payer, socialized medicine.”

Lucy Nashed, a Perry spokeswoman, said last week that “this is not free money. It’s either being borrowed from China or taken out of taxpayers’ pockets.”

Understanding Economics

About 29 percent of Texas citizens lack insurance, according to a March 8 poll by Gallup Inc. The state ranked 40th in health last year because 30 percent of residents are obese and one of every four children lives in poverty, according to United Health Foundation, affiliated with UnitedHealth Group Inc. (UNH)

Hospitals have urged expansion because it will reduce expensive and ineffective emergency-room visits, said Stephen Mansfield, chief executive of Methodist Health System in Dallas and next year’s chairman of the 2,100-member Dallas Regional Chamber.

“The eight other Republican governors were just as opposed to this initially as Rick Perry,” said Mansfield, who met with him in February. “They came to understand the economics.”

Chamber lobbyists from Dallas, Fort Worth and San Antonio have discussed Medicaid with legislators during the current session in Austin, officials said. Dayoub of the El Paso chamber spoke with Lieutenant Governor David Dewhurst and House Speaker Joe Straus, both Republicans, and about 35 legislators of both parties.

Flagging Feds

Business groups “are looking short term,” said Republican Senator David Duell, a Greenville physician who met with chamber representatives. He said he doubted the Obama administration’s commitment “with the long-term viability of the federal government in question.”

Such opposition is “idiocy,” said Margaret Jordan, a former Federal Reserve Bank of Dallas director who is president of Dallas Medical Resources, a consortium of hospital executives and businesspeople headed by billionaire oilman Ray Hunt. “Medicaid expansion is a win-win for everybody.”

Refusing to expand Medicaid could cost Texas employers as much as $448 million in fines because the 2010 law penalizes some companies when workers can’t obtain affordable coverage, Jackson Hewitt Tax Service Inc. said in a March 13 report.

Perry and other opponents will compromise because of pressure from hospitals and businesses, Trevor Fetter, chief executive officer of Dallas-based Tenet Healthcare Inc. (THC), said in an interview Feb. 27. Tenet is the third-largest U.S. hospital firm.

“There isn’t a scenario I can envision that is worse than the status quo in Texas,” Fetter said.

Staying Mum

Nonetheless, chambers of commerce in Austin and Houston, home to the nation’s largest medical complex, haven’t taken positions.

Chief executives of six of Texas’s best-known companies -- AMR Inc. (AAMRQ), AT&T Inc. (T), Dell Inc. (DELL), Exxon Mobil, Kimberly-Clark and Texas Instruments Inc. (TXN) -- declined through publicists to discuss expansion even though chambers some of the firms belong to have taken a stand.

Exxon Mobil CEO Rex Tillerson, an ex officio member of the Dallas chamber, hasn’t taken a position, spokesman Alan Jeffers said. AT&T Chief Financial Officer John Stephens, a Dallas chamber director, had no comment, spokesman Brad Burns said.

High Plains

The influence of business on Texas Republicans is modest compared with that of evangelicals and Tea Party-affiliated groups, said Mark Jones, who teaches politics at Houston’s Rice University.

“The Republican base views Obamacare as a matter of principle, while the monied interests view it as a dollars and cents issue,” Jones said.

The tension is evident 330 miles (531 kilometers) west of Dallas in Lubbock, a wind-swept city of 230,000 that is the hometown of 1950s rock ’n’ roll pioneer Buddy Holly and Texas Tech University. Medicaid divides the chamber of commerce, which favors expansion, and Republican Senator Robert Duncan, a lawyer who has served in the legislature since 1989.

After officials at the city’s UMC Health System explained how Medicaid expansion could cushion cost increases, chamber directors unanimously approved a resolution, said Chairman Carlos Morales.

“It’s a lot of money we’d be missing out on,” said Morales, who is executive vice president of Caprock Home Health Services Inc., a company that employs 2,200 in 12 Texas offices.

Doubting Economists

Duncan, however, says Texas can’t afford the deal because Medicaid crowds out spending for education, parks and other priorities.

“It’s not a free lunch,” Duncan said. He said he was unconvinced by studies by former deputy State Comptroller Billy Hamilton and Waco economist Ray Perryman suggesting expansion would boost the state’s economy by increasing business activity and productivity.

Freetail Brewing Co., a San Antonio pub that employs 31 people, pays half the premiums for employees who work more than 30 hours a week, owner Scott Metzger said. Costs have risen by 10 percent or more during each of the past four years, he said.

“I’m eager and happy to offer insurance and wish I could offer it in a more expansive way,” he said. “I absolutely believe people ought to have that security.”

Bee Moorhead, executive director of Texas Impact, an Austin interfaith group, said opponents are stubborn in the face of facts.

“The numbers are as crystal clear as they are ever going to get,” she said. “You’ve got the business community, the urban counties, the hospitals and the doctors saying, ‘Oh, for God’s sake give us the money.’”

To contact the reporter on this story: David Mildenberg in Austin at dmildenberg@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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