Texas Lawmakers Approve Increased Spending; Medicaid Gets More Money

Despite warnings that rising health care costs could create a financial "crisis" in Texas and lead to "major tax increases," the state Senate Finance Committee approved a $111.7 billion, two-year state budget March 26, the Houston Chronicle reports. Compared to the $98.1 billion two-year budget lawmakers approved in 1999, the proposed budget is a "dramatic increase," the Chronicle reports. The reason for the increase is related to rising health care costs, as well as increases in inflation and in the state's population. The budget includes $1 billion in new spending to pay for the state's share of health insurance programs for state employees, retired teachers and state college and university employees. In addition, the budget includes $828 million in state tax dollars for Medicaid, with half that amount going to cover increased health costs (Ratcliffe, Houston Chronicle, 3/26). Also on March 26, the state House Appropriations Committee approved an emergency appropriations bill that, in part, would pay for a $595 million Medicaid shortfall in the current budget. To alleviate that shortfall, as well as those for other programs, state lawmakers approved a measure that would shift $718 million that the state had budgeted for 2000-2001 but never spent (Susswein, Austin American-Statesman, 3/28). Total budget overruns could reach as high as $700 million, the Austin American-Statesman reports (Susswein, Austin American-Statesman, 3/27).

Deliberate Underestimations?
Some lawmakers have accused state Health Department officials of "deliberately low-balling" Medicaid cost estimates two years ago -- thus sparking the current budget shortfall -- "to save money for" then-Gov. George W. Bush's (R) proposed state tax cuts and to "help his presidential campaign," the American-Statesman reports. Health department officials underestimated the number of Medicaid beneficiaries by about 100,000 people and miscalculated the program's costs by $595 million. Some members of the House Appropriations Committee said that the Health Department made the error even though there were "several early warning signs that the numbers might have been off." For example, State Rep. Sylvester Turner (D) said that Medicaid enrollment was beginning to increase during the 1999 legislative session. For their part, agency officials say the increase was not visible until after the 2000-2001 budget had been approved (Austin American-Statesman, 3/28).

More News
In other Texas Medicaid news:

• A "processing glitch" has delayed payments from the state to care providers and social services treating children under the Medicaid Case Management program, the AP/Dallas Morning News reports. Health Department spokesperson Doug McBride said that about 50 providers had not been paid $50,000 in claims. A spokesperson for National Heritage Insurance Co., the state's main Medicaid contractor, said the company was working to correct the problem. The payment delay led some providers "to say they were on the brink of shutting down" (AP/Dallas Morning News, 3/28).
• State lawmakers are considering two bills that would tax the state's nursing homes to increase Medicaid reimbursements to those facilities. Although the "financing maneuver is unusual," the bills would allow the state to draw $2 in federal money for every dollar it collects from the nursing homes through the new tax. The process would give the state an additional $520 million, which could be used to hire more nurses and nursing aides and pay more competitive salaries. Through Medicaid, Texas contributes about 71% of the costs of caring for nursing home patients, reimbursing facility owners about $83.50 per resident per day. Under the bills, nursing homes would pay a $5 per resident per day "quality assurance fee" that is expected to raise enough money to allow the state to increase Medicaid reimbursements between $10 and $12 per resident per day. But nearly 200 of the state's 1,200 nursing facilities say they would not benefit from the bills because they do not house a "significant number" of Medicaid beneficiaries (Bahadur, Austin American-Statesman, 3/27).
• State House Appropriations Committee Chair Robert Junell (D) introduced a proposal last week that would transfer authority over the state's Medicaid program from the state Department of Health to the state Health and Human Services Commission. A "handful" of agencies administer various parts of the Medicaid program, the Dallas Morning News reports. Representatives from the Texas Hospital Association and the Texas Medical Association, as well as state lawmakers, "embraced" the idea, which could be attached to some of the other Medicaid-related bills the Legislature is considering. Health Department spokesperson McBride said the agency would "follow whatever the Legislature decides" (San Martin, Dallas Morning News, 3/20).