Here are some of the key issues and trends to keep an eye on in the realm of Texas Health and Human Services this session.
First, a few notes about Health and Human Services (HHS) in Texas and why it’s important to Texans.
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Lots of people: According to numbers from the HHSC Consolidated Budget for 2010-2011, there were at least 4 million Texans using some form of services or benefits provided by the Texas HHS enterprise in FY2009.
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Lots of money: According to the Texas Budget Source, Texas HHS spending accounts for the 2nd largest expenditure the state makes each biennium. Costs and caseload continue to increase at an alarming rate. Texas HHS agencies accounted for over 54,000 employees in Fy09, thus incurring significant employee compensation and retirement liabilities.
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Lots of Federal influence: Adding to the budgetary challenges are the federal matching funds the federal government gives the state to administer these programs. In the Medicaid world, the Federal Medical Assistance Percentage (FMAP) dictates the percentage of every dollar spent in a given state that will be taken up by the federal government. In Texas, the FMAP is approximately 60% federal, 40% state. The match for the Children’s Health Insurance Plan (CHIP) is approximately 75% federal, 25% state. Thus, the feds incentivize increased state HHS spending.
In short, HHS has a big impact on many people in Texas and the overall budget of Texas. Thus, it is a big cost driver to the state. With that in mind, here are a few trends to watch:
The Consolidated HHS Budget for 2010-2011 says the total Medicaid budget for the next biennium will be $46 billion (which includes both state and federal money), which is over 70% of the total HHS budget. During that time, total Medicaid caseload is expected to be 3,021,181 in FY 2010 and 3,105,401 in FY 2011. There are two broad categories of Medicaid, acute care and long term care. Acute care is essentially monthly health insurance for families at or below a certain percentage of the Federal Poverty Level (FPL). Long term care is meant to cover extended care for elderly people at a certain percentage of the FPL.
What makes Medicaid budgetarily challenging is that it’s an entitlement program; the state must enroll anyone who applies and is determined eligible. Since 3M Texans are already on some form of Medicaid and Medicaid is already such a large part of the state budget, any policy changes that even slightly increase the eligible population (like increasing the FPL % eligible) or add to the services available to Medicaid clients are going to have a huge impact on the budget for this and future biennia.
The Consolidated HHS Budget for 2010-2011 says the projected CHIP enrollment will be 547,862 in FY2010 and 551,750 in FY2011. The HHSC 2010-2011 Legislative Appropriations Request says CHIP spending is projected to be $804M and $847M for the biennium. Like Medicaid, longer eligibility periods, expanded population, and/or expanded services can drive up the cost of this program, though not to the scale of Medicaid.
State schools are institutions that house certain, mentally-challenged Texans. Sensational stories have recently surfaced of abuse in some of these institutions. Both Governor Perry and State Senator Jane Nelson have issued calls for reform of the Texas state school system, so expect to see a lot of coverage of this issue and funds allocated to address the problems.
TIERS stands for Texas Integrated Eligibility Redesign system. It is meant to replace the 1970’s era system that the state currently uses for determining the eligibility of millions of clients for several state HHS programs. Integrated eligibility refers to the ongoing effort to convert the state’s face-to-face model of eligibility determination to a multi-channel customer relationship management model that involves several private contractors. Both efforts have the potential to make state services easier for clients to use and less costly to taxpayers. Yet, both efforts are also big, expensive, controversial, and fraught with delays.
With increasing costs and caseload, state HHS agencies are often forced to cut corners. One cost reduction method is to reduce the reimbursement amounts to providers who take clients of state health programs. The unfortunate side effect is that the provider community often reacts by refusing to see clients of said health program, thus reducing access to care.
The state can have both positive and negative effects on the private health insurance market. On the positive side, the state can reduce the number of costly mandates it requires health insurance carriers in the state to offer. On the negative side, it can increase said mandates, which tend to increase the cost of private health insurance and drive away carriers, which reduces competition and increases the cost. The state can also grow state health programs to the point where they “crowd out” private insurers, reducing demand for private health insurance and driving out private carriers.
This is the idea that individual households should have more control over and accountability for their health spending. Health savings accounts (HSAs) are a popular type of consumer directed health care. Two years ago, Governor Perry proposed that Medicaid be restructured to create more of a competitive market for and individual choice recipients. Furthermore, the Federal Employees Health Benefit Plan (FEHBP) the insurance plan for non-military, federal government employees, offers a wide-array of insurance carriers and health savings accounts, elements of which could be a model for Texas public health programs.
How will the state work to facilitate movement of recipients of state HHS programs into gainful employment, positive health choices, and the private health insurance market?
