What Texas Would Look Like Without Obamacare

Texas, in the midst of a surge of coronavirus cases, asked the Supreme Court on Thursday to overturn the Affordable Care Act.

If successful, the court challenge could wipe out the health law’s protections for pre-existing conditions. And as many as 23 million Americans could lose coverage.

Texas has long been at the center of this fight. It leads an 18-state coalition in challenging Obamacare’s constitutionality. A federal court there ruled in favor of Texas in 2018, a decision that surprised many legal experts. The lawsuit bears the state’s name, too: Texas v. United States.

What would the health care landscape of Texas look like if the challenge were successful? It’s not hard to envision the state without Obamacare — you need only look back about a decade ago, to before the law existed.

Texas had the highest uninsured rate in the country before the Affordable Care Act, and still does today. This is largely because Texas does not participate in the health law’s expansion of Medicaid.

Yet even without the expansion, Obamacare brought about substantial increases in coverage for Texans. A Texas without Obamacare is one where about a million more people are uninsured. Individual premiums might actually decline — in large part because the plans would include fewer benefits and deny coverage to those with pre-existing conditions.

Those changes would come at a moment when Obamacare has heightened importance. Many of the millions who have lost jobs, and the insurance that comes with it, are expected to transition to buying their own coverage in the individual market. A report from the Urban Institute estimates that 1.6 million to 3 million Texans will lose employer-sponsored coverage as a result of the economic downturn.

Their options would look really different without Obamacare.

In 2010, the year the Affordable Care Act passed, Texas had an uninsured rate of 23.7 percent. That worked out to nearly six million Texans without insurance.

At the time, there was widespread variation in how states ran individual insurance markets. About 16 million people, including one million Texans, got coverage through those markets, and Texas had one of the less-regulated ones.

Texas, for example, allowed insurers to charge women higher premiums than men (a practice that was outlawed or restricted in 12 other states, mostly Northeastern ones). Individual market insurers could deny coverage to those with pre-existing conditions. The average individual market plan around that time came with a $222 monthly premium. The plan was not required to cover expensive benefits such as childbirth or prescription drugs.

Texas did run a high-risk pool, established in the late 1990s, in which those denied in the individual market could seek coverage. But patients seeking coverage would face a one-year waiting period to sign up and premiums twice as high as those in the general insurance market. The Duke Health Justice Clinic estimates the plan had only 24,972 enrollees as of 2011, a small share of the 4.5 million Texas residents with pre-existing conditions.

Since the start of the Affordable Care Act’s marketplaces in 2014, Texas’ uninsured rate has fallen about five percentage points. The number of insured Texans has increased by about one million people, according to data from the Kaiser Family Foundation.

Coverage gains were largest among people of middle income, older people and racial minorities. The insured rate for Hispanic Texans increased by 10.9 percentage points between 2013 and 2016, according to a study published in the American Journal of Public Health. Over that same period, coverage increased 12.1 percentage points for Texans between 50 and 64 years old, and 10.2 percentage points for those describing their health as “fair or poor.”

Most Texans gaining coverage have done so through the health law’s insurance marketplaces. The premiums in Texas have tended to be lower than those elsewhere in the country, but there have been some big increases in recent years. The monthly price of a midlevel individual market plan has increased to $462 this year, up from $359 in 2017.

The prices are significantly higher than those that existed before Obamacare and, nationally, expensive premiums have long been a pain point for the Affordable Care Act. But the plans that exist now offer a wider set of benefits and cannot limit annual or lifetime benefits. That’s a key trade-off that Obamacare’s architects felt was worth making: a requirement that insurers cover a wide range of medical conditions, even if that meant plans became more expensive.

It’s not totally clear that Texans who buy their own coverage are actually paying more, either. In Texas, 91 percent of Obamacare enrollees receive federal subsidies that lower the cost of their monthly premiums, and 59 percent get financial help that reduces their deductibles and co-payments.

Some probably gained coverage through other health law provisions, such as the requirement that health plans keep dependents enrolled until they turn 26. An estimated 3.1 million young adults nationally gained coverage through that provision in the health law’s first three years, but state-level enrollment data is not available.

Texas’ decision not to participate in the health law’s Medicaid expansion significantly limits the health law’s reach there. The Kaiser Family Foundation estimates that 1.5 million low-income Texans would be eligible for coverage if Texas participated.

Of course, Texas and other states could come up with a plan to replace the Affordable Care Act. So far, that hasn’t happened: As The Texas Tribune reported, the State Legislature did not prepare a replacement plan before adjourning at the end of 2019.

The body, which meets every other year, will not convene again until 2021.