Individual Texas Health Insurance Providers

In Texas health insurance, a recently released joint study by the Health and Human Services Commission (HHSC) and the Department of Insurance that examines the consequences of the state losing Medicaid funding leaves little doubt that Medicaid withdrawal would harm the state economically. It would also deprive poor, elderly and disabled people of access to health care, likely raise property taxes, rob the state of tax revenue, and lead to increases in insurance premiums. Several conservative Republicans, including Gov. Rick Perry, had broached the idea of Texas opting out of Medicaid to help solve the state’s budget gap. That is likely to change, given the report’s conclusion that Medicaid withdrawal could result in 2.6 million Texans becoming uninsured. The report also notes that the state would surrender $15 billion in federal matching funds yet continue to pay federal taxes to support other states’ Medicaid spending. The spike in the uninsured population would also swamp the state’s hospitals in billions of dollars worth of uncompensated care. On the topic of Medicaid reform, the report discusses the need for a “market-oriented” reform that would convert Medicaid funding to block grants and provide states wide latitude to spend federal money as it sees fit. That could include funneling Medicaid money into private savings accounts that individuals could use to purchase coverage from private insurers on the open market, a strategy Perry supports. The topic will likely see public debate when the State begins its legislative session in January.

HHSC has confirmed how it intends to implement its share of the 2.5 percent budget cuts ordered last week by the state’s executive and legislative leadership. The agency said it will reduce its general revenue spending by $42 million, cutting Medicaid and CHIP provider rates by 1 percent for acute care. Reimbursement rates for nursing care facilities as well as community-based care will be cut 2 percent. All of these cuts are effective February 1 and will cover the remainder of the current fiscal year. These cuts come on top of a 1 percent provider rate cut that was implemented as part of the 5 percent budget cut exercise ordered in January by the state’s leadership. Those previous cuts drew criticism from the state’s health care providers who said doctors already lose money treating Medicaid clients and that rate cuts would force providers away from offering care to the state’s most needy. HHSC spokeswoman Stephanie Goodman explained that with Medicaid taking up so much of the agency’s budget, it only made sense to look there for budget savings.

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