by Andy Hogue
Republicans and Democrats were divided on just how much “health care reform” will cost the Lone Star State at a joint meeting of the Senate State Affairs and Health and Human Services committees March 31.
Senators heard from Health and Human Services Executive Commissioner Tom Suehs, who talked on how much the federal health care bill, now just a week old, might cost Texas over the next decade and a half -- an estimated $27 billion. The Senators also heard from Texas Insurance Commissioner Mike Geeslin, who warned against trying to predict an exact cost in terms of finances and manpower, but suggested coming up with plans to respond to a variety of scenarios.
What this means for Texas, as Senate Health and Human Services Committee Chair Jane Nelson (R-Lewisville) told LSR, is a reduction in funding for other state services.
“This plan will do many things, but saving taxpayer dollars is not one of them,” Nelson said. “There are certain elements that provide savings, but on the whole it will grow our budget to the point where health and human service costs take resources away from education, transportation, and a whole host of other state services.”
Counting the costs
Suehs said the average monthly Medicaid caseload would increase to $2.28 million under the bill and it would take about $27 billion in general revenue to pay for Medicaid eligibility changes between 2014 and 2023. That’s much higher than the $22-24 billion 10-year figure that was (informally) estimated last week, and one billion less than what Gov. Rick Perry, Lt. Gov. David Dewhurst, and Speaker Joe Straus put in a letter to the Texas Congressional delegation last week. Nelson told LSR she was confident of the figures Suehs cited.
Those figures, however, are much higher than what some Democrats are expecting. Sen. Royce West (D-Dallas) hinted that the bill may actually save the state of Texas money in the long run. West said that with more Texans insured, that would reduce the amount Texas spends on trauma care, for starters, and could relieve county indigent care budgets. Suehs agreed the savings are worth considering in an overall calculation.
West could not be reached afterward for further comment, but the liberal-leaning Center for Public Policy Priorities estimated last month that 1 million adults would be added to the state’s Medicaid rolls, and would cost about $185 million per year starting in 2017 and going up to about $370 million annually by 2020 [$3.5 billion or more over a decade].
“Time will prove the accuracy of the numbers,” Suehs said to the committee.
Sen. Eliot Shapleigh (D-El Paso) referred to Suehs’s projected costs as nothing more than “sticker shock.”
Sen. Robert Duncan (R-Lubbock), read from a letter authored by U.S. Rep. Henry Waxman (D-Mass.), a strong supporter of the health care bill who said that Massachusetts’ share of the health care cost is an estimated $1.4 billion for a decade.
“… Not $24 billion,” Duncan said, asking Suehs to explain how Texas’ cost would be higher. “This is such a glaring difference.”
Suehs said Waxman must have been counting from the current year, which is one consideration. “By the way, their methodology does not factor in administrative costs,” he said. He added that Massachusetts has less than 1 percent of its population without insurance due to the state’s 2006 mandate — a far cry from 6.1 million non-insured Texans (of out of about 24 million residents).
“I don’t know where he [Waxman] went to school and got his math education, but it’s not where I did,” Suehs said.
Shapleigh said the cost estimate is greatly affected by what years are examined. He said most federal studies are from 2010-19, whereas Suehs’ figures start in 2014 and go through 2023. Suehs said the federal government will pick up most of the tab through 2014, so it’s safer to start when the lion’s share of the state mandate begins.
Geeslin warned against making too exact a prediction.
“What troubles me the most about this,” he said, “is the economics of it all. Right now, no one knows to the dollar and to the person ultimately what the impact will be. There’s a lot of theory out there, and there are all these multiple variables that we have to analyze. They’re not going to show their true weight until 2014, and still beyond in the out-years. … I would caution against anyone who is going to stand up and say ‘we think it is going to cost this.’”
As far as the Department of Insurance’s part of the cost goes, Geeslin said he would have to hire as many as 35 new employees to handle the workload. Nelson said discussions on staffing infrastructure have only begun.
“I’ve asked the agency to move quickly on a breakdown of how this plan will impact the budget we are about to start developing for the next biennium,” she said. “It is important to note, though, that this bill is embedded with provisions that will take months and perhaps even years to determine their actual costs.”
Former Rep. Arlene Wohlgemuth, executive director of the Texas Public Policy Foundation, said another cost is the attracting of hundreds of thousands of new Medicaid patients — even those who probably don’t need to be on it. The new law prohibits states from using an asset test to determine eligibility for medical assistance, after all.
“This could allow a person to have $100,000 in a savings account and two Cadillacs in the garage but have the taxpayers bear the full cost of their health coverage through Medicaid,” she said.
Theoretically, the individual mandate would cover every citizen – excepting those who opt to pay the fine, of course.
Geeslin said predicting how the market would react is anyone’s guess.
“This nation has never seen a policy undertaking like this in several decades,” he said. “I mean, this is huge … there are a lot of moving parts that have to be at the table in order to synchronize this thing and make it work … The best thing we can be prepared for at TDI is to be prepared for a wide range of scenarios.”
He continued: “Millions of Texans are going to have to learn to buy insurance. This will be one of the largest consumer education efforts that we’ve undertaken.”
Getting consumers on board with the health care bill is one thing. Keeping physicians and other health care providers in the system is yet another. Suehs said he assumed the state would stay the course in raising primary care rate increases for Medicaid, hoping physicians will continue to stay in business.
“Having insurance doesn’t mean you have access to health care.” warned Sen. Bob Deuell (R-Greenville).
Suehs said about $5.5 billion of the overall cost projection consists of increasing payments to health care providers so they won’t turn down Medicaid patients.
He also prognosticated that 237,000 children will eventually be transferred between the state’s Children’s Health Insurance Program (CHIP — a program where the state kicks in 25 percent of the consumer’s cost) to Medicaid (where the state currently pays 40 percent), which may increase children’s coverage.
How Texas may comply
The Texas Department of Insurance is scheduled for a Sunset review in 2011 — which would put Commissioner Geeslin under a great degree of pressure already. This led committee members such as Sen. Judith Zaffirini (D-Laredo) to ask if a “quasi-agency” would be necessary to oversee compliance with the health care bill. Other senators, including Nelson, mentioned the possibility of appointing a health care ombudsman to assist Health and Human Services.
New legislation, no doubt, would be required in the 82nd Legislature to comply with new federal guidelines and spending mandates. Suehs said those bills could pertain to uncompensated care, how to spend tobacco fund revenue, trauma funds, how to manage the county indigent health care program in lieu of insurance expansion, etc.
Suehs said if nearly every citizen were covered by health insurance, then county indigent funds would cover mostly “non-citizens” – which met with some grunts of displeasure from the committee room’s dais.
Perhaps by the time the House Select Committee on Federal Legislation meets on April 22 to discuss the health care bill, more analysis and cost estimates will be available. Meanwhile House conservative leaders are leaning toward a position that urges state executives and agencies to “ignore” the health care bill (see LSR Mar. 26) until a counter-offensive suit from Atty. Gen. Greg Abbott is heard in federal court.
Looking further down the road — maybe even before most of the mandates kick in in 2014 — there’s another option: Throwing the health care plan out entirely in the event of a massive Republican resurgence in Congress, and substituting a more free-market friendly alternative.
Phil Gramm, former U.S. senator and Health subcommittee chairman, said in a March 25 Wall Street Journal op-ed that if the GOP doesn’t want America to follow Britain and Canada into socialized health care, “they must change the system so that families have more power to control their own health-care costs.”
“This will entail real changes,” Gramm said, “like tax deductions for health insurance, not for prepaid medicine; refundable tax credits for families to buy their own insurance; freedom to negotiate with insurance companies; rewarding healthy lifestyles; tort reform; and reforming Medicare and Medicaid so every consumer has deductibles and copayments based on their income.”