Texas Kids Kicked Off Coverage: What’s Happening with Medicaid Unwinding

Urgent action is needed to fix errors and address issues causing eligible Texas kids to lose Medicaid.

Texas recently began the monumental task of re-checking eligibility for everyone on Medicaid, following the end of pandemic-era coverage protections. This process is often referred to as Medicaid “unwinding.” 

Texas is moving at breakneck speed to cull its Medicaid program without  adequate staffing or technology to do the job right. The state has not actually determined whether a majority of the people removed were eligible or not, and more were cut off in error in apparent violation of state and federal law. While it’s both expected and appropriate for people who no longer qualify to be removed from Medicaid, Texas’ haphazard approach is certainly tossing out many eligible people too.  

Texas is Off to a Terrible Start 

From April through July, Texas cut off  Medicaid coverage for 490,000 Texans without determining whether or not they remained eligible (called a “procedural denial”). Nearly 400,000 are children. According to the KFF Unwinding Tracker as of September 15, 2023, Texas has one of the worst procedural denial rates among states, cutting off coverage for 38% of people up for renewal without determining whether they remain eligible. Texas makes it harder than it needs to be for eligible people to get and keep Medicaid, which contributes to the state’s high rate of procedural denials. For example:

  • To date, Texas has only renewed 2% of people using the reliable data it already has on hand (called an “ex parte” renewal). This shockingly low data-driven renewal rate is the second worst in the U.S. By contrast, as of September 15, 27% of national renewals were data-driven. That’s 10 times higher than Texas’ rate. In data-driven renewals, parents don’t have to fax, mail, or upload paycheck stubs when the state already knows what the family earns through state payroll data, for example.
  • Texans trying to renew must also overcome several red tape and paperwork barriers that contribute to procedural denials. Examples include:
    • The state sending renewal paperwork to the wrong address,
    • Clients blocked from accessing the online renewal system,
    • Paperwork sent with multiple conflicting due dates, and
    • A call center that is closed on evenings and weekends, making it hard for Texans with inflexible jobs to ask questions or renew by phone. 

On top of this, the Health and Human Services Commission (HHSC) incorrectly cut off Medicaid for nearly 100,000 Texans due to system glitches, a fact that first came to light through agency whistleblowers. Letters from whistleblowers paint a picture of an eligibility system in crisis: workers on long-term, mandatory overtime, a growing list of systems errors disrupting coverage for newborns and pregnant women, mounting paperwork backlogs that delay Medicaid and SNAP benefits, and a lack of direction or resources from state or agency leadership to address the problems. New state data shows a backlog of 54,000 Medicaid applications submitted in March or earlier that still were not processed by the end of August. Whistleblowers indicate that glitches are not being fixed systemically; if accurate, these issues appear poised to snowball. HHSC is sending a tidal wave of renewal notices in July, August, and September (roughly as many in three months as it used to send over a full year) despite existing paperwork backlogs and known system errors. 

How We Got Here

Texas’ poor unwinding outcomes were avoidable, yet come as no surprise. 

HHSC prepared for unwinding for well over a year, taking positive steps to increase outreach, get address updates, hire more staff, and prepare for growing paperwork backlogs. It wasn’t enough. Staff at Texas’ Medicaid agency are doing the best they can with the direction and resources offered, but they have not been set up to succeed.

With oversight from Governor Abbott’s office, HHSC took on an unrealistic timeline given ongoing staffing challenges, crammed way too many renewals into a few months, and failed to adopt best-practice streamlining measures that could have eased strain on the overburdened eligibility system. Even since it’s become clear that Texas’ unwinding outcomes place us at or near the bottom of the 50 states, Governor Abbott has not directed HHSC to make meaningful mid-course corrections to keep eligible Texas kids, seniors, and individuals with disabilities covered.

When Texas leaders fail to invest in the programs that keep us fed and healthy, Texans and our families suffer. Earlier this year, the Texas Legislature failed to fully fund HHSC’s budget request to temporarily hire additional eligibility workers to get through the onslaught of work we knew was coming. HHSC did not even ask the Legislature for funding to fix the IT system, despite known issues that force eligibility workers to use time-consuming manual workarounds. Whistleblowers indicate that HHSC staff drafted a budget request for system fixes to help with unwinding, but it was nixed by agency leadership and was never sent to the Capitol. This should come as no surprise; state agencies in Texas are not encouraged to ask for the funding they really need to fulfill their vital roles for Texans. In fact, the Governor, Lieutenant Governor, and Speaker of the House often tell state agencies that they cannot include major cost drivers like inflation in their base budget requests, and sometimes demand agencies make significant cuts to their base budget requests, regardless of population growth or needs.

Texas has built a Medicaid program that, on its face, provides access to health care for low-income kids, seniors, pregnant women, and individuals with disabilities the state legislature deems “deserving.” But behind the scenes, Texas makes it harder for eligible people to get and keep Medicaid than it needs to be. Bureaucratic barriers and system errors are allowed to continue and prevent too many eligible Texans from enrolling in or renewing Medicaid. National projections indicate that 3 of 4 kids who will lose Medicaid during unwinding will still be eligible, and kids of color who remain eligible will lose coverage at disproportionately high rates. Bureaucratic barriers that make it hard to get and keep Medicaid exacerbate racial and health inequities. Eligible Texas kids churn in and out of coverage, while their parents jump through hoops, wait for paperwork to be processed, or re-apply. This keeps kids from getting physicals for sports, mental health visits, or asthma inhalers. For medically complex kids, losing Medicaid can mean losing the in-home nursing assistance they need to stay alive, eat, or breathe. 

The Governor and HHSC Executive Commissioner Must Take Action Now

Everyone in Texas does better when all of our kids, from Del Rio to Dallas, can see a doctor when they get sick. Medicaid is a cornerstone of our health care system; just over half of all children in Texas are covered by Medicaid, and it acts as a lifeline for low-income seniors, pregnant women, and Texans with disabilities. Yet, Texas is removing people from Medicaid rapidly and by design, predominantly children, and often without figuring out whether they are actually eligible or not. 

Governor Abbott can take urgent action. He should immediately hit pause on procedural denials while:

  • Ensuring HHSC has the direction and resources, alongside the Legislative Budget Board if necessary, to rapidly and systemically fix the coding issues that are wrongly ending coverage for people in apparent violation of federal law, and 
  • Directing HHSC to take immediate action to reduce its far-too-high procedural denial rate and increase its nearly-worst-in-the-nation ex parte renewal rate. 

Failing to act urgently could have financial consequences. Whistleblowers allege system coding errors have already resulted in the loss of federal funds, and the federal Medicaid agency has the authority to defer payment of certain federal funds until states resolve unwinding issues.  

If Texas continues to fail Texans with Medicaid, the Centers for Medicare and Medicaid Service (CMS) should step in to ensure the state is conducting Medicaid renewals in compliance with federal law, using data-based renewals to the maximum practicable extent, reducing procedural denials, and processing Medicaid paperwork promptly. 

Texas has lots of policy options to improve outcomes from Medicaid renewals that are both encouraged by CMS and do not require any changes to state law. Texas isn’t lacking options; it is lacking leadership needed for urgent action. It is up to Governor Abbott to ensure that no more eligible kids, seniors, or Texans with disabilities get booted off Medicaid. 

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