What the Valley’s 357K Medicaid enrollees stand to lose if budget cuts occur

As the Democrats and Republicans in Congress remain at a standoff over the Trump administration’s fiscal year budget, one of Texas’ foremost economists has weighed in on what the potential impact could be on the Rio Grande Valley if $880 billion in potential Medicaid cuts stick.

In addition to fears that low-income or vulnerable Americans would be adversely affected without the program, renowned economist M. Ray Perryman told The Monitor this month that Medicaid recipients could see higher healthcare costs.

Perryman, president and chief executive officer of The Perryman Group, a financial analysis firm, said such impact may cascade from the enrollee to the state.

“If these cuts were to ultimately happen, which will be difficult if not impossible to enact, it would raise health cost to Medicaid recipients and potentially require states to make up some of the difference,” Perryman said via email.

Perryman pointed to the 16% of Texans enrolled in Medicaid as an example of the state already representing “the stingiest program in the country,” covering groups such as pregnant women, children, people with disabilities and low-income elderly residents.

There are more than 4 million people enrolled in Medicaid in the state of Texas, and around 357,586 in the Valley as of July 2024, according to data from Texas Health and Human Services.

The majority of the Valley’s Medicaid caseload rests in Hidalgo County with 228,587; there are 104,070 in Cameron County, 20,184 in Starr and 4,745 in Willacy counties.

“The Valley has a disproportionate share of beneficiaries due to the relatively high poverty rate (about 24% vs 14% for the state) and this would experience greater effects from any cuts,” Perryman explained. “Given the minimal coverage offered in Texas, however, the effects are less than they would be in other states (particularly the 40 that have adopted Medicaid expansion).”

‘ECONOMIC HARMS’

The House recently passed a budget resolution to avoid a government shutdown until September. The Senate was expected to vote on it Friday.

Until then, and while there has been no indication or explanation of what operational aspects could be affected by slashing program funding, Republicans have argued that eliminating fraud and waste in Medicaid has long been overdue.

Though this isn’t necessarily a matter of contention, fears within the Democratic Party and even some members of the GOP remain due to the severity of the cuts potentially destabilizing the program.

For perspective, the possible cuts exceed the $871 billion the federal government spent in 2023 on funding Medicaid.

“At this point, a budget resolution has passed the House (not the Senate) which mandates substantial cuts in programs overseen by the Energy and Commerce Committee,” Perryman said. “Although Medicaid wasn’t mentioned, there is no practical way to achieve the required cuts without major reductions in Medicaid funding.”

Concerns about economic impact go back some time. In April 2024, for instance, The Perryman Group provided an estimation indicating a drop in insurance coverage.

The Texas Hospital Association reported that 2.1 million Texans were disenrolled from Medicaid in 2024, “with 65% of that group deemed ineligible due to procedural reasons, such as failing to respond or to submit documentation, rather than true ineligibility.”

But with that drop, The Perryman Group estimated losses of about $58.9 billion in annual gross product as well as 509,200 jobs.

Of that amount, they estimate there will be a loss of about $29.3 billion in yearly gross product and 281,100 jobs due to a decrease in health-related spending.

This will also result in a loss of $4.8 billion in annual gross product and 36,500 jobs lost due to an increase in uncompensated care, as well as a loss of about $24.9 billion in annual gross product and 191,600 jobs due to a decrease in productivity.

“Economic harms are spread across the state,” The Perryman Group wrote in an article published April 2024.

Texas has a rapidly rising number of uninsured children and adults that will only continue to increase if the reductions to Medicaid occur.

“In fact, Texas has the highest percentage and total number of uninsured residents in the country by a wide margin, and the recent reductions only exacerbate the problem,” The Perryman Group wrote.

They explained that if the state expanded health insurance coverage by using available federal funds it would not only alleviate a substantial portion of the problem, but it would also ultimately support the state’s healthcare system.

Using dynamic tax analysis, The Perryman Group further indicated that state funds required to access federal resources would create a significant return on investment, benefiting the wellbeing of Texans while also aiding local governments “with higher revenues and lower costs for uncompensated care.”

“Notable economic and fiscal gains would be an outcome of this process and, more importantly, Texans would have better access to the health care they need,” The Perryman Group stated.

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