Texas Gov. Rick Perry addresses the annual Conservative Political Action Conference February 9, 2012 in Washington, DC. Thousands of conservative activists are attending the annual gathering in the nation's capital.
Texas Gov. Rick Perry addresses the annual Conservative Political Action Conference February 9, 2012 in Washington, DC. Thousands of conservative activists are attending the annual gathering in the nation's capital. - 
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Jeff Horwich: A handful of states have talked about it, but the Lone Star is the lone state -- so far -- to officially opt out of critical parts of the Patient Protection and Affordable Care Act. Texas Governor Rick Perry has sent his letter to the U.S. Secretary for Health and Human Services declaring Texas's intentions. Texas, by the way, has the highest rate of uninsured people among the 50 states. They're the first but they might not be the last.

To help us untangle the details of opting out, we've got Mark McClellan -- he's the top health care reform expert at the Brookings Institution. Hello.

Mark McClellan: Jeff, good to talk with you.

Horwich: Very specifically, what does Texas say it is not going to do?

McClellan: It says it is not going to do the Medicaid expansions that are offered under the Affordable Care Act, and it also says that it is not going to set up a state insurance exchange -- this is the state support for making insurance coverage available under the law. 

Horwich: The Supreme Court laid the ground work, the roadmap you might say, for how Texas can do this. 

McClellan: It gave the states more options. Under the laws originally passed, the states had a take it or leave it offer. They could either take the expanded Medicaid program, which would include about 13 million new, estimated people around the country, or they could take nothing in Medicaid at all. Judge Roberts said that that amounted to a gun to the head of the states, and he said that government could only offer expansions of Medicaid, not make it conditional on participating in the entire baseline program. According to Governor Perry, they want to exercise that option of just staying where they are in terms of Medicaid coverage, not expanding it out further.

See how much your state will spend under expanded Medicaid. View an Interactive Map

Horwich: So they can decline the expansion and that allows them also to opt out of the exchanges?

McClellan: Well the exchanges is a little bit less clear. The law, as written, there is a provision for a federal fallback, where the federal government would run an exchange for Texans if the state government doesn't set it up. The federal government has been working on setting that up, but there still are a lot of unresolved details there as well. A lot of this law is very much a work in progress. And a lot of the further directions of the law are going to depend not only on the Supreme Court decision, Jeff, but also on what happens in the election in November. 

Horwich: In terms of sheer dollars, what is a state like Texas giving up when it declines this additional Medicaid money?

McClellan: Well it's giving up a lot of additional funding. The state concern was also that it would require some state funding on top of that, and as you may have noticed, there was some reaction to Governor Perry's announcement in Texas from the hospital association, from some other provider groups, saying basically that. Saying this is a lot of money that could be going towards helping people that would otherwise be uninsured and otherwise help us with uncompensated care. There is still a lot to be resolved despite the Supreme Court decision and despite Governor Perry's recent announcement. 

Horwich: Dr. Mark McClellan is a former administrator of the Federal Centers for Medicare and Medicaid Services and currently director of the Engelberg Center for Health Care Reform at the Brookings Institute. Great to talk with you, thank you.

McClellan: Great to talk with you too, Jeff.

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Follow Jeff Horwich at @jeffhorwich