Waco’s health care system has a lot at stake this week in the Congressional effort to extend Affordable Care Act premium subsidies that lapsed at the end of 2025.
The U.S. House of Representatives voted 230-196 on Thursday to extend the subsidies, with 17 Republicans joining Democrats to move forward over the objections of Speaker Mike Johnson. The legislation faces an uncertain future in the Senate, but Congressional leaders have felt pressure to find a solution as the end of pandemic-era subsidies causes ACA marketplace premiums to skyrocket for 20 million Americans.
The outcome will have a big impact on Waco Family Medicine, the area’s main provider of affordable primary care for lower-income residents. The nonprofit clinic system sees some 75,000 people a year and uses its status as a federally qualified health center to make care affordable to anyone who seeks help. It’s also known for its residency program for young doctors.
Dr. Jackson Griggs, the system’s president and CEO since 2019, sat down with Waco Bridge Editor-in-Chief J.B. Smith on Dec. 19 to talk about the ACA expiration and other threats to health care for low-income populations.
Those threats include shrinking Medicaid eligibility limits and lower margins on prescriptions, which together contributed to the closure of three clinics and layoffs of 52 people last year.
The interview aired Jan. 2 on “Friday Forum with The Waco Bridge” on KWBU-FM 103.3 and is available online.
The following Q&A is a lightly edited and condensed version of that interview.
J.B. Smith: What’s special about Waco Family Medicine?
Jackson Griggs: I think there is alignment in every department, from maintenance and facilities to our clinical nursing staff, to our physicians in our residency program. There’s alignment on caring for the whole patient and caring for them in a way that brings respect and dignity. The culture is entirely organized around the belief that everyone in our community deserves high-quality, comprehensive primary care, without exceptions.
JBS: The Waco Bridge and other news organizations have reported on a pilot program you have with Waco ISD to provide onsite behavioral health therapy for middle school campuses. Can you tell me a little bit about that, and also just how important is Waco Family Medicine in general in providing mental health services in Waco?
JG: Mental health issues have been on the rise since really around 2010. We saw a really sharp uptick in the prevalence of mental health conditions in children, adolescents and young adults. The adult population has had a steady, slight increase in that curve. But prevalence in the children and young adult population has been skyrocketing.
JBS: As a result of the pandemic and all the time spent away from other people?
JG: It’s multifactorial. Even before the pandemic, you know, in 2010 you had the introduction of phones into children’s hands, which meant that they were spending more time looking at screens as opposed to interacting with each other. You had social media. And frankly, just the deluge of concerning world issues that have immediate access to children. They’re getting the regular feeds, whether in short videos or social media, around what’s happening in the world and the increasing polarization in society, and all of that just creates constant stress.
… We were seeing that more and more children were struggling, and we recognized that we had to meet that need, and so we worked hard to upskill our staff to be ready to manage all kinds of mental health needs that occur in the ambulatory setting, and then recognizing the barriers to access particularly among families with young children. We thought, well, how can we reach those children who have needs in a way that doesn’t require parents to take a day off work or deal with transportation barriers? Well, the answer is in going to where they are. So we began discussions with Waco ISD, and this came out of the behavioral health leadership team. … That’s a committee that was formed by Prosper Waco years ago.
Headwinds for clinic
JBS: I want to talk a little bit more about your situation right now. In mid-December, you went before the Waco City Council for your annual check-in. The city gives some money in helping you with the uninsured. You and the mayor both agreed that you’re seeing some really troubling trends in your ability to keep providing these services. How would you summarize those trends?
JG: We have historically had a relatively stable financial formula for maintaining the primary care infrastructure in our community. Primary care … not only provides preventive care and addresses acute issues but when folks have chronic conditions it maintains their health so they’re not in and out of the hospital ER or admitted to the hospital. It lowers costs and increases quality of life.
… We’re functionally the safety net in this portion of Central Texas, and when that economic formula that we have always relied on is undermined by policy, how do we continue to take care of this large number of uninsured individuals and their uncompensated care?
JBS: Could you tell us in broad strokes where your funding comes from and where it’s under threat?
JG: About half of it comes from insured individuals. The majority of that is public insurance, Medicare and Medicaid. … Medicaid is cost-based reimbursement for Federally Qualified Health Centers, which means that we get reimbursed what it costs to see patients.
We have openings for that population, which in Texas is functionally pregnant women and children and people who are dually eligible for Medicaid and Medicare. …
We also take commercial insurance, and we have a fair number of folks who have traditional employer-sponsored insured or individual marketplace insurance.
And then we have a pharmacy that has a special federal designation that allows us to buy medications or inventory at that pharmacy at the federally negotiated best price. When an individual comes in and they have insurance that covers a formulary, we’re billing the insurance company. We get that retail reimbursement, so that spread is a lot larger than CVS or Walgreens or HEB pharmacies. Because we’re a safety net, because we have this federal designation, our pharmacy becomes an area where we make a sizable margin. But part of that federal requirement is that we use that margin for uninsured populations.
JBS: So you’ve got insured and publicly funded patients and you have uninsured patients who are kind of subsidized by those others.
JG: That’s exactly right. A third of our patients are entirely uninsured.
JBS: In the last (two years) there was the unwinding of Medicaid on the state level that required people on Medicaid to reapply.
JG: That’s a great synopsis of it. The way we’ve operated (in the past), about 38-39% of our visits were Medicaid. During the pandemic it went up to about 42% because of provisions in the public health emergency that the state couldn’t disenroll someone off Medicaid. But the way the state (of Texas) disenrolled or kicked people off Medicaid was so aggressive that we went from 42% down to 33% of our patients who are on Medicaid, … and that had a multimillion-dollar impact on our revenues because we essentially shifted folks who were publicly insured to being completely uninsured.
JBS: I understand Medicaid unwinding was the primary reason you had to make cuts (in 2025) You closed three clinics and had to have a staff reduction of 52.
JG: That was incredibly painful. It was one of the worst experiences that I’ve had professionally, particularly as a CEO. Having some great staff members who we cherished and having to let them go because of bad policy, you know, it was heartbreaking. And of course, I’m also thinking about those individuals out in our community who will have more difficulty accessing care because clinics in their neighborhood closed.
JBS: You mentioned also the prescription deal you get. I understand that’s been affected by some policy decisions.
JG: Pharmacy benefit managers are kind of middlemen who have inserted themselves in the 340(b) system. It’s a group of businesses that have been eroding that margin that I was describing that allows us to subsidize the uninsured population, and we’re one of a few states that don’t have any regulations on pharmacy benefit managers. The 340(b) federal program is what supports the safety net, and now we’ve got for-profit middlemen who are eroding those profits.
ACA cuts hit home
JBS: One thing that you didn’t mention at that council meeting was the loss of (Affordable Care Act) subsidies in 2026. We don’t know how that’s going to play out, but let’s talk about it. If that does play out, what that’s going to mean to that mission to provide for the uninsured?
JG: I’m really concerned about the low-income families. These are oftentimes folks who have one or two or three jobs who are trying to put food on the table and pay for utilities. They don’t have employer-sponsored insurance, and the ACA marketplace plan has allowed them to have insurance to cover not just primary and preventive care, but chronic conditions and hospital care as well.
With the expiration of some enhancements in that marketplace … those individuals who only paid $0 to $50 a month for insurance are going to be paying $150 to $200 a month. And if you make $30,000 total household income and you have a family of four, that differential is like food on the table. It’s basic needs, so you end up going without, which only leads long-term to higher health care costs because you delay care, you get sicker, you end up with a hospital visit, and that leads to bankruptcy and permanent financial damage.
JBS: Those subsidies have been at this higher rate for the last four years or so, and during that time you’ve seen a decrease in the uninsured rate, right?
JG: That’s exactly right. So, we’ve seen the uninsurance numbers decrease, and those that are insured on the marketplace plans have increased. That enhancement is what’s going away It’ll revert back to pre-pandemic rates.
JBS: So, ballpark number. How many people in McLennan County are going to be affected if these go away?
JG: The rough estimates I’ve done – this is back of the napkin stuff – is about 9,000 in McLennan County. The cost of uncompensated care on average is about $1,600 per individual.
So $14 million in costs are going to hit us. That will be divided between hospitals, Waco Family Medicine and a few other entities.
JBS: So we’re talking about those ripple effects. People say, This is too expensive, I’ll take my chances, and they become uninsured. They have to get care, and you have to find some other way to pay for it. What happens to you? At what point can you no longer do that?
JG: Through the years we’ve worked to build up a reserve for these adverse times, and we can cover a little bit of a negative impact in these down years, but we’ve got to fix the policy that underlies the crisis. We have a buffer to tolerate a little bit of these permutations in the formula I was describing earlier, but we can’t endure in this way.
JBS: What are you bracing for in the year to come?
JG: At its maximum, we’re looking at about a 3% impact to our budget for the erosion of that Marketplace insured population. If all of our patients who are currently in the marketplace became uninsured and they continued to seek health care at the same rate, we would lose about $3 million.
… It’s a little bit like fighting a multi-front war. If you have one challenge ahead of you, you can organize around it and attack it. We’re just seeing policy impacts from every direction that are undermining the safety net, and that’s what’s creating the challenge.
WFM’s new digs
JBS: I wanted to ask you about the new $65 million building on Colcord. What effect is that having on service besides having a nice place to see the doctor?
JG: When we first envisioned this 11 years ago, we wanted a place where our patients could walk in and feel the kind of respect we have for them. We wanted them to realize that we really do mean what we say, that we want them to have the best. There has been a community outpouring of philanthropy, so the mortgage on the building is not one of the major drivers of our financial challenges.
You walk into the building and we have a community marketplace with a lot of community-based organizations that have offices so patients can walk right in and get social services. There’s a wellness center, a teaching kitchen. Our pharmacy is featured right at the entry. Finally, the residency program clinic matches the caliber of residency program that we have in reputation and in training, which is one of the top in the country. So I feel really good about the residency clinic now being the environment where we want to train the very best and brightest in primary care in America.
