The Washington PostDemocracy Dies in Darkness

Biden officials rescind Trump’s okay for Texas’s $100 billion-plus Medicaid plan

The decision is seen as an effort to push Texas officials toward expanding Medicaid under the Affordable Care Act to cover more low-income residents

Texas Gov. Greg Abbott and former president Donald Trump in Dallas in 2017. (Evan Vucci/AP)
Placeholder while article actions load

The Biden administration on Friday rescinded approval for changes to Texas’s Medicaid program granted by the Trump administration, saying that federal Medicaid officials “materially erred” by speeding approval for the state’s $100 billion-plus request in January.

The decision was characterized as an effort to push state officials toward accepting the Affordable Care Act’s Medicaid expansion, which would cover more low-income residents, said two federal health officials, who spoke on the condition of anonymity to discuss private conversations. Texas, which has more uninsured people than any other state, is one of 12 that have not expanded the program.

“[W]e are rescinding the approval issued on January 15, 2021,” because it did not go through the full federal rulemaking process, Liz Richter, the acting administrator of the Centers for Medicare and Medicaid Services, wrote in a letter to Texas officials obtained by The Washington Post.

In its final week, the Trump administration told Texas officials that it had approved a 10-year extension for its Medicaid plan, which was set to expire in 2022. The waiver provides more than $11 billion in federal funding per year to the state, meaning that the Biden administration’s decision puts billions of dollars in federal funding to Texas at risk.

Health advocates had described that waiver as an effort to work around the federal Medicaid expansion by setting up alternate funding to help cover the costs of uninsured patients.

In a statement Friday, Texas Gov. Greg Abbott (R) slammed the Biden administration decision, saying it was “obstructing health-care access for vulnerable Texans and taking away crucial resources for rural hospitals in Texas. … With this action, the Biden administration is deliberately betraying Texans who depend on the resources made possible through the waiver.”

The approval for Texas’s changes, known as a Medicaid 1115 waiver, was among a flurry of last-minute activities overseen by Trump health officials in the waning days of the administration. Public health advocates and researchers decried the moves as inappropriate attempts to grant GOP governors’ requests and lock in Trump-era changes. Trump officials said that they were moving to provide stability for health-care providers.

“The 10-year extension permits greater financial certainty for the state and its safety net providers that serve Medicaid populations,” Seema Verma, then-administrator for the Centers for Medicare and Medicaid Services, wrote in a Jan. 15 letter to Texas.

Verma also said there was no need for the approval to go through the standard public notice-and-comment process, citing the coronavirus pandemic. But the Biden administration concluded the decision was a mistake.

“Upon further review, we have determined that CMS materially erred in granting Texas’s request for an exemption from the normal public notice process,” Richter wrote in her letter Friday.

In a statement, CMS said the agency had “erred in exempting the state from the normal public notice process — a critical priority for soliciting stakeholder feedback and ensuring public awareness.”

The new Democrat-led administration has been unwinding a series of actions overseen by Trump officials, including the prior administration’s approval of Medicaid work requirements.

The Biden administration also has pushed a dozen holdout states to accept the federal Medicaid expansion. Medicaid officials said on a briefing call for state officials last month that if Texas opted in to the federal expansion, the state would get a $3.9 billion funding boost over two years and 2.06 million uninsured people would become eligible for Medicaid coverage, according to a presentation obtained by The Post.

The Texas Medicaid program has been the subject of political disputes across multiple administrations. Texas officials in 2011 excluded Planned Parenthood from its Healthy Texas Women program, prompting the Obama administration in 2012 to cut federal women’s health funding to the state. But the Trump administration in January 2020 restored the funds by approving Texas’s Medicaid waiver, which was originally set to run through December 2024.