Report details financial impact of Texas’ Medicaid expansion

S&P Global Rankings recently released its quarterly report on the status of finance across the globe. This report, coupled with an S&P podcast episode of Extra Credit, details the status of Medicaid in Texas, and what recently passed legislation and a new budget could mean for the state. 

The report does not express an opinion regarding the state’s budget, but analyzes what a change of spending in certain areas could mean. The report warns that Texas may feel financial strain if the cost of Medicaid in the state continues to rise. This, along with a potential economic recession, could dramatically impact the state. 

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S&P uses data based on the state budget to make these determinations. This month, Texas Gov. Greg Abbott signed the 2020-2021 budget into law. The $250 billion budget, the largest yet, is set to spend about 16 percent more overall than previous budget cycles. 

Credit analyst at S&P, Oscar Padilla, explained the status of Texas’ financials in a statement on Extra Credit. During the segment, he claimed that the state of the state was good, that job growth continued to outpace the national average, economic growth is continuing, and unemployment levels remain relatively low.

Despite the recent economic growth, the report ranked Texas Medicaid near negative, a ranking that Padilla attributed to the trend of limiting Medicaid appropriations during budget cycles. This means that the Medicaid budget needed additional funding in order to meet certain shortfalls in current operations. These appropriations were not met this session. 

“Costs to support the Medicaid program continue growing in Texas, as in nearly every state, and in our opinion, while we do not anticipate it, should a recession occur during the upcoming biennium, caseloads would likely rise, resulting in further supplemental appropriations in the next legislative session – a period in which resources may be stretched,” Padilla explained. 

This session, Texas legislators worked with HHS to eliminate waste and fraud occurring in the Medicaid budget. Although savings are likely here, the increased spending in Medicaid, coupled with a potential economic recession could put strains on the Texas budget overall.