Texas, Washington State Contend with Increasing Public Health Program Enrollment, Budgets

Increasing enrollment in Texas' Medicaid and CHIP programs has helped boost the state's projected budget deficit for next year from $5 billion to more than $7 billion, as state agencies overseeing the programs request additional funding, the Austin American-Statesman reports. According to a state Health and Human Services Commission budget request submitted to the governor and state Legislature, the Department of Health Services will need about $400 million more this year to cover larger-than-anticipated caseloads in Medicaid and CHIP; Medicaid enrollment is 200,000 more than expected, and 20,000 more children than expected have enrolled in CHIP. Kristie Zamrazil, a spokesperson for the Health and Human Services Commission, said, "The caseload increase is generally due to a less robust economy and Medicaid policy changes: an easier enrollment form, a longer eligibility period for children and combined Medicaid and [CHIP] outreach." The state also will need an extra $1.25 billion for the 2004-2005 budget cycle to cover new Medicaid beneficiaries, and an additional $740 million to "keep up with rising Medicaid and [CHIP] costs and to cover additional children who will likely qualify for insurance," the American-Statesman reports. The Health Services Department budget request also asks for an extra $109 million for nursing home care, and the Department of Health requests an additional $61 million to pay for medical transportation and other services. The American-Statesman reports that given that the increased budget requests come as the state's tax revenues are "lag[ging]," legislators likely will consider raising taxes and cutting services to cover a potential budget deficit (Susswein, Austin American-Statesman, 8/20).

Washington State Health Fund
Declining tax receipts, with rising enrollments and rapidly rising costs in Washington state's Medicaid program and Basic Health Plan, a program for low-income individuals who do not qualify for Medicaid, could give the state's Health Services Account a $300 million budget deficit, according to recent budget projections, the Seattle Times reports. The account, which is financed through taxes on tobacco, alcohol and hospitals, was created to fund Medicaid and the Basic Health Plan. The expected deficit in the Health Services Account, which at one point carried a surplus, is "compounded by [state officials'] shaky assumptions" that the state could receive nearly $1 billion through use of the Medicaid upper payment limit, commonly known as the Medicaid loophole (Thomas, Seattle Times, 8/18). Under the loophole, some states reimburse health facilities, including nursing homes and hospitals, for more than the actual cost of services for Medicaid beneficiaries, receive inflated matching funds from the federal government and then have the facilities return the extra funds, which states then can use for services not related to health care. The Clinton administration issued a rule in January 2001 that set the upper payment limit at which states may pay facilities at 150% of the Medicare rate for any one service. Stating that the rule did not go far enough in curbing abuse of the loophole, the Bush administration issued a rule last November to reduce the upper payment limit to 100% for some states this year and to phase out the loophole completely by 2010 (Kaiser Daily Health Policy Report, 5/31). Not being able to use the loophole could "rip a $235 million hole" in the account, the Times reports. Further, Gov. Gary Locke (D) might then need to order service reductions or scale back enrollment in Medicaid and Basic Health because the current budget requires him to impose across-the-board reductions in Health Services to avoid a deficit in the account. While Medicaid and Basic Health administrators are preparing for cutbacks, some lawmakers are considering using revenue from a recently approved tax hike on cigarettes to cover the expected deficit. Those funds had been intended to expand Basic Health coverage. Some lawmakers and health care advocates say the state should "find the money" and even raise taxes to fund the program expansion (Seattle Times, 8/18).