Health Care and the 2005 Legislative Session:

An Advocate’s PerspectiveIAF Conference on Education and Health

Issues, Austin, Texas

February 6, 2005

Anne Dunkelberg, Assistant Director (dunkelberg@cppp.org)

900 Lydia Street - Austin, Texas 78702Phone (512) 320-0222 – fax (512) 320-0227 - www.cppp.org

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• Latest US Census Bureau statistics show:24.6% of ALL Texans, and 26.9% of Texans

under age 65, were uninsured in 2003

That’s about 5.5 million Texans

Another 3 million covered by Medicaid or CHIP

Culprit: Texas has one of the lowest % of employer-sponsored insurance (along with Arkansas, Louisiana, Montana, New Mexico) - 9% below national average for under-65, at 52.4%, and 11.8% below national average for under-18.

Context for Funding Texas’ Health Care “System”

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Medicaid: As of January 2005, 2.7 million Texans were enrolled in Medicaid:• 1.8 million were children

• about 78,000 of these children, or 4%, were receiving disability-related Medicaid (97% of these on SSI),

• about 13,700 were pregnant teens; • 165,300 in TANF families (6.2% of total caseload)

• 862,500 were adults: •667,600 (77% of the adults) were elderly or disabled. Adults

on SSI account for 60% of the aged and disabled recipients (76% of blind/disabled are on SSI).

• Other adults: 87,700 maternity coverage; 45,100 TANF parents (1.7% of total caseload); 61,000 either TMA (Transitional Medicaid Assistance) or parents who are at or below TANF income, but not receiving TANF cash assistance

Children’s Health Insurance Program (CHIP):•as of September 1, 2003 — 507,259 children •as of January 1, 2005 — 332,055 (drop of 175,204, or 35%)

Health Care for Poor & Low-Income Texans

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Race/Ethnicity of Texas Medicaid Clients as of 9/2004      

Total (Female, Male, and Unknowns)

Medicaid Enrollment

(All Ages) As Of

September 2004

Percent of Total Enrollees (All Ages) by

Race/Ethnicity As Of

September 2004

Medicaid Enrollment (Ages 0-18)

As Of September

2004

Percent of Total Enrollees (Ages

0-18) by Race/Ethnicity

As Of September 2004

Anglo 682,034 26.0% 349,338 19.8%

African American 495,542 18.9% 319,704 18.1%

Hispanic 1,354,332 51.6% 1,054,177 59.7%

American Indian 8,911 0.3% 5,819 0.3%

Asian 40,032 1.5% 20,765 1.2%

Not Known 45,618 1.7% 16,349 0.9%

Overall Total 2,626,469 100% 1,766,152 100%

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Texas Medicaid Cuts, 2004-05 BudgetRestored

• Medicaid Maternity Coverage For Low-Income Women: cut coverage from 185% of the federal poverty level to 158% of poverty. – HHSC proposed, and LBB approved restoring to 185% FPL for FY

2005 ($20.3 million), eff. 9/04.– Medicaid Community Care Hours of Service for 100,000

Elderly Texans and Disabled Adults were cut by 15% in the state budget, but HHSC added money last summer for 2004, and again in August 2005 ($141 million) to prevent cutting care in 2005.

Cuts that Remain- Eligibility and Benefits• Medically Needy Spend-Down Program for Parents

(Temporary Coverage for Families with High Medical Bills).• TANF Parents Now Lose Medicaid due to Work Sanctions (total

TANF enrollment down 122,000 from a year ago, but Medicaid “parent coverage” down about 37,000 since July 2003).

• Other Community and Long-Term Care: Other programs for aged and disabled have had to reduce the numbers of people they serve or reduce the services they give.

• Cut the personal needs allowance of Medicaid nursing home residents (the monthly amount that Medicaid nursing home residents may keep from the SSI, Social Security or other pension income, the rest goes to the nursing home) from $60 to $45.

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Cuts that Remain- Eligibility and Benefits

Eliminated these services for ALL ADULTS on Medicaid: (Aged, Disabled, Adult TANF recipients, Pregnant Women) • mental health services by social workers, psychologists,

licensed professional counselors, and licensed marriage and family therapists,

• podiatrists, • chiropractors, • eyeglasses and hearing aids

Medicaid provider rate cuts: • Most Medicaid and CHIP providers had rates cut. The budget

would have cut them even more, but in August 2003 state leaders added funds to reduce the size of the cuts for 2004, so that hospitals and doctors have still had a rate cut of 2.5% instead of 5%; nursing homes 1.75% instead of 3.5%, and community care providers by 1.1% instead of 2.2%.

• In August 2004, HHSC proposed and LBB approved keeping the cuts at the same level for 2005 (i.e., not making deeper cuts); $53.2 million allocated for this. Exception: hospitals ARE taking a deeper 5% cut.

Medicaid Cuts, 2004-05 Budget

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Summary of CHIP changes:• Benefits eliminated: dental; vision (eyeglasses

and exams); hospice; skilled nursing facilities; tobacco cessation; chiropractic services. Mental health coverage reduced to about half of the coverage provided in 2003.

• Coverage period reduced from 12 months to six.

• Premiums and co-payments increased.

• New coverage delayed for 90 days.

• Income deductions eliminated (gross income determines eligibility).

• Asset test (limit) added for those above 150% of the Poverty Line (took effect August 2004).

CHIP Cuts, 2004-05 Budget

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Medicaid and CHIP: the Budget (So Far)

The LBB Budget (SB 1) • does not fully fund Medicaid Current Services at HHSC,

and also • does NOT restore ANY of the 78th Legislature’s Medicaid

cuts. Still Needed at HHSC:– $1.23 BILLION GR for Medicaid inflation/cost increases – $56.7 million to Restore Medicaid Adult Services

for mental health, podiatry, hearing aids and eyeglasses. ($5.8 million more for a managed care adjustment, and chiropractic; $40 million for GME payments.)

– $177 million to Restore Medicaid Rate cuts – $35 million for Partial Medically Needy Restoration (per

HHSC, this amount would reinstate payments at about 20% of normal Medicaid rates.)

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Medicaid and CHIP: the Budget (So Far)

Medicaid at DADS: For Nursing Homes, Community Care, and Programs for Texans with Mental retardation. Still Needed:

• $29.3 million for Staffing: LBB budget does not include enough money for staffing levels to grow along with the programs (and actually would require some staffing cuts)

• $53.8 million to restore rate cuts from 78th Legislature

• $13 million (+/-) to restore Nursing Home Personal Needs Allowance

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Medicaid and CHIP: the Budget (So Far)

CHIP at HHSC: The LBB Budget (SB 1) • does not fully fund CHIP Current Services at HHSC, and

also • of the 78th Legislature’s CHIP cuts, restores ONLY dental

and vision benefits. Still Needed at HHSC:– 29.8 million for CHIP caseload growth (at current 6-

month coverage) and cost/inflation growth– Approx. $140 million* to restore back to 2003

policies:• Coverage period reduced from 12 months to six.• Premiums and co-payments increased.• New coverage delayed for 90 days. • Income deductions eliminated (gross income determines

eligibility).• Asset test (limit) added for those above 150% of the Poverty

Line (took effect August 2004).

(No official estimate yet from HHSC of cost of full restoration for 2006-07.)

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Medicaid and CHIP: the Budget (So Far)

Summary: • At LEAST $1.3 BILLION more needed for Medicaid and CHIP

Current Services– that is, without this, MORE CUTS NEEDED.• At LEAST $520 million more needed to RESTORE Medicaid

and CHIP cuts.• PRS in LBB budget got only $30 million GR above 04-05; PRS

had requested nearly $200 million in E.I.s, and HHSC report recommended $253 million MORE than that.

• DON’T FORGET Medicaid! Medicaid needs $1.3 BILLION for Current Services and at least $380 million to restore cuts. CHIP restoration is NOT the only priority. MANY MORE Texans lose out if Medicaid is not adequately funded.

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• Medicaid Biometric Finger Imaging – Statewide mandate? Universal “Smart Card”?

• Medicaid Prescription Drug benefits (PA/PDL)

• Medicaid Managed Care Statewide Expansion

• Increased Standards and Oversight for Contracting & Privatization

• Women’s Health and Family Planning Medicaid Waiver

• Regional Trauma Care system (funding), Increased county obligation to pay for care to uninsured residents provided by OTHER (i.e. urban) counties.

• MediCARE drug benefit in 2006 means elderly & disabled on Medicaid will no longer get Rx from Medicaid. $465.3 million state dollars assumed by HHSC to be paid to Feds in Texas’ 2006-07 budget.

Other Major Medicaid Issues: on the Agenda for the 2005 Session?

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• MH - Reductions in Community Services (LBB funds at 04-05 level + $400K, slight increase in fed $ projected) Adults dropped from 52,500 in ’03 to 46,100 in ’05; LBB would increase by about 1,400 by 07-stil about 5,000 below 03. Children served/month 11,400 in ’03, dropped to 10,000 in 05; LBB would allow to grow by 369 children/month in 07, still 1,100 below ’03 levels.

• MR — Reductions in Community Services: clients/month in 05 were 3,200 BELOW 03 levels; LBB freezes at that level.

• Reduction of Community Mental Health Priority Population to Three Disorders

• Privatization of MHMR services and institutions• Substance Abuse treatment for adults and children: LBB includes $ for

increased caseloads, but DECREASES $ for dual-Diagnosis treatment• LBB budget assumes FEWER beds in state mental hospitals• Department of Health (TDH) Programs funded below current services

levels:– Kidney Health program serving 21,247 in 2005. LBB recommends

cutting clients by 3,949 from 05 to 06, then growth by 1,629 to bring 07 clients to 18,927 (2,320 below 05).

– County Indigent Health Care grant program: ’04-05 projected funding $15.8 million; LBB recc is $10.2 million for 06-07

– HIV Medication Program: (LBB includes $600K above 04-05, allows for increase of 20 clients in 2007)

– Children with Special Health Care Needs: (LBB includes $ to add 200 children by 2007)

– Primary Health Care: 04-05 served 11,000 fewer than ’03; LBB funds cutting clients by another 1,500.

Other HHS Cuts from 2003 Session

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Texas Child Medicaid and CHIP Combined Enrollment

January 2002-January 2005

2,146,236

2,149,352

1,600,000

1,700,000

1,800,000

1,900,000

2,000,000

2,100,000

2,200,000

Source: All figures from Texas Health and Human Services Commission

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Biennial GR %

State Budget, 2004-05 $58.9 billion

•Replacing Robin Hood At least $2.3 billion

4 %

•“Buying down” local school property taxes by 10 cents per $100 taxable value

$2 billion 3.4%

•Reaching the national average in state/local spending from taxes

$16 billion 27%

Other Price-tags

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Texas Per Capita State/Local Spending, Fiscal 2002(Total: $5,975 per capita; 41 % is state, 59 % is local)

$686

$574

$346

$341

$124

$94

$75

$72

$46

$202

$171

$1,475

$- $300 $600 $900 $1,200 $1,500

K-12 Education

Medicaid and Welfare

Higher Education

Highways & Streets

Hospitals

Prisons

Police/State Troopers

Public Health

Parks/Recreation

Judicial/Legal

Housing & Comm Dev

Natural Resources

Source: U.S. Bureau of the Census, State & Local Government Finances, Fiscal 2002.

50-State Ranking:

13th

46th

26th

39th

15th

13th

35th

41st

23rd

36th

33rd

43rd

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Revenue Reform Must Address the WHOLE Budget, Not Just Public

Education •Long-term structural inadequacies of state/local tax system are putting too much pressure on property taxes

•Heavy reliance on sales taxes also makes Texas tax system very regressive (taking more from families with the lowest incomes)

•A $1 per pack increase in cigarette and tobacco taxes could raise $1.5 billion per biennium, which could be used to help restore Medicaid and CHIP cuts and support caseload growth.

•Proposed changes to the tax system MIGHT ONLY reduce property taxes and replace them with new taxes. This would mean:

•No new money for public education

•Not enough money for Medicaid and CHIP CURRENT SERVICES, much less for restoring cuts, and

•Not enough money for higher ed, parks, prisons, etc.

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Biggest Threat to Health care may be in WASHINGTON this

YearBush Admin. Budget proposal expected by Feb. 7,

and likely to include steps toward block granting, ending entitlement structure of Medicaid.

National Governor’s Assoc. (dominated by Republican Govenors) has sent letter (with unanimous support of all states) opposing including Medicaid “reform” in 2006 budget, “especially if it does nothing more than shift additional costs to states.” “benefits for the dual eligible population should be 100% financed by Medicare”

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Medicaid is the Largest Single Source of Federal Support to States, 2003

National Association of State Budget Officers, 2003 State Expenditure Report, November 2004.

Total Federal Fund Expenditures = $326 billion

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Ways to Be Informed and Involved

• Go to www.cppp.org and subscribe to CPPP’s e-mail publication, the Policy Page.

• Go to www.texaschip.org to get on Texas CHIP Coalition listserve

• for National information about Congress, the President, Medicaid and CHIP: www.familiesusa.org

• for more technical and detailed information about Congress, the President, Medicaid & CHIP: www.cbpp.org