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Frew v. Hawkins

Get ready for another Medicaid lawsuit

That’s the very likely outcome if proposed cuts to Medicaid reimbursement rates go through.

“You cut rates an additional 10 percent, I’m not sure I can comply with the access provision,” Thomas Suehs, commissioner of the state Health and Human Services Commission, told the House Appropriations Committee on Thursday.

He warned that short-term savings from cutting reimbursement rates could be outweighed by a long court fight over whether the state was providing sufficient access to health care for children who are Medicaid recipients.


In 2007, the state ended a nearly 15-year dispute over whether Texas provided sufficient medical coverage to children enrolled in Medicaid. As part of the settlement, the Legislature increased funding for the program by more than $1.8 billion, using state and federal funds.

While the settlement specified only the amount of money the state had to spend on Medicaid for the 2008-09 budgeting period, Texas also agreed to maintain standards of accessibility of health care services for citizens on Medicaid.

Hospital and child advocacy groups say that the proposed reduction of reimbursement rates would result in fewer doctors seeing patients using Medicaid for insurance. That would increase the likelihood that the state violates the accessibility standards it agreed to, potentially setting the stage for another legal battle, they said.

“You’re talking about a payment rate currently, that’s before the cuts, that’s about 50 percent of commercial rates,” said John Holcombe, chairman of the Medicaid committee at the Texas Medical Association. “Now, we’re looking at a situation where we’re going to cut rates again. And if we believe what’s happened in the past will happen again, we’ll see a reduction again in the number of physicians that are willing to see Medicaid patients.”

And in the meantime, all those folks who would have had access to Medicaid will start showing up at the emergency room instead, so even the short-term savings of these cuts is largely illusory as cities and counties get stuck with the tab. People don’t stop needing medical services. It’s just a matter of how to pay for them, and whose budget it comes out of. And I’ll say again, Texas and its handling of Medicaid is a strong argument for federalizing the program and providing a single standard for reimbursements. It’s a shame that wasn’t part of the Affordable Care Act.

If it weren’t for Obama, we wouldn’t be having this conversation

Rep. John Zerwas writes an op-ed extolling the virtues of the health insurance exchange bill he’s filed.

While it is no secret that I oppose the federal health care reform bill, if we don’t act now to create the Texas Health Insurance Connector, our state could be forced to cede regulatory control of a significant chunk of its health insurance market to the federal government. The desire to avoid such oversight has generated broad support for the connector, which I am proposing in House Bill 636. In addition to members of both political parties, a variety of groups that don’t usually agree on issues have come forward to support keeping Texas in charge of its health insurance market through the passage of HB 636. Those groups include the Texas Association of Business, Texas Hospital Association, Texas Medical Association, Texas Restaurant Association and two Texas health insurance industry groups.

Why must we do this? Among the provisions of the federal health care reforms is a requirement that an organized health insurance market known as an American Health Benefit Exchange be established in every state to provide coverage for U.S. citizens or legal immigrants who do not have access to affordable employer-based coverage. Each state must demonstrate by 2013 that it will have the structure in place to operate its exchange or the federal government will establish and manage it for that state. The Texas Health Insurance Connector, a simplified health insurance market, would serve as our state’s exchange.

Although I support the efforts by Texas Attorney General Greg Abbott and others to have the health care bill ruled unconstitutional, the connector proposal is more about what’s best for Texas and less about what the federal government has passed. It’s about ensuring that Texas maintains regulatory oversight over what could end up being a large segment of its health insurance market.

The exchange concept did not originate with Obamacare. The idea was first proposed in the 1970s, and the model is being used in such politically opposite states as Utah and Massachusetts. Because of the federal government’s 2013 deadline, our current legislative session may provide us the only opportunity to take action to keep the federal government out of our health-insurance market.

I’ve already said something nice about Zerwas and HB636, so I’ll just take a moment to note his almost defensive touting of his Republican bona fides in these paragraphs. It’s almost as if he’s a bit bashful about proposing legislation that would make it easier for someone to get health insurance, which is certainly understandable given the direction of the modern day Republican Party and its hostility to the concept of universal coverage. Be that as it may, if it weren’t for “Obamacare”, none of this would be a topic for discussion. In four regular legislative sessions under unified Republican control, the state hasn’t done a damn thing to improve access to health care; indeed, the two most notable achievements in that time were slashing CHIP in 2003 and settling the Frew lawsuit over Texas’ insufficient Medicaid payments in 2007. None of the bills Zerwas filed in 2009 had anything to do with insurance exchanges, which as he notes existed as a concept well before they became mandatory. It would be the same thing this year if the Affordable Care Act passed by President Obama and the Democratic Congress hadn’t forced Texas Republicans to do something. See this Trib interview with Rep. Zerwas for more.

The school district squeeze

Everywhere you look there’s bad budget news.

“This is the worst I’ve ever seen it,” said Fort Bend ISD Chief Financial Officer Tracy Hoke, who’s worked in school finance for two decades. “I could turn out every light, and we’d still have a deficit.”

Hoke isn’t exaggerating about the lights. The Fort Bend Independent School District is facing a $20 million deficit for the coming academic year. The district’s annual utility bill is expected to top $18 million, a $1 million increase over this year.

The district’s other expenses also are rising — staffing three new schools will cost $2.3 million, for example — but its revenues are staying essentially flat under Texas’ school funding system. In 2006, state lawmakers slashed property tax rates and capped districts’ revenue at a certain amount per child. That amount varied widely and tended to penalize school systems with booming student enrollment. Fort Bend, for example, got $4,871 per student, while Tomball ISD earned $5,783.

Three things to note here. One is that any school finance system that cannot keep up with the needs of the fastest growing districts is a system that is built for failure, in every sense of the word. My thesaurus isn’t big enough to adequately describe the magnitude of the catastrophe that is brewing.

Two, education and health care are the biggest parts of the budget. As was recently pointed out to me, you could zero out the criminal justice article of the budget – shut down the prisons, set all the inmates free, close the courts – and you still wouldn’t cover even half of the revenue shortfall. (Don’t believe me – see for yourself. Schools are covered in Article 3, health and Human services in Article 2, with the biggest piece (Medicaid) being under the Health and Human Services Commission, and criminal justice is in Article 5, under Department of Criminal Justice.) We basically froze school spending in the 2006 special session where that giant unaffordable property tax cut originated, and the Lege is going to be forced to cut school spending further in 2011. Did I mention this was a giant disaster about to happen? Which leads to point three:

David Thompson is a Houston attorney who represented districts in a school finance lawsuit that was decided by the Texas Supreme Court in 2005. The court ruled for the districts, noting that they no longer had “meaningful discretion” over their property tax rates. The Legislature responded with revisions to the funding system in 2006.

Thompson said the changes provided “temporary relief,” but schools now are struggling under their fourth year of the so-called target revenue system. He wouldn’t say whether school boards are considering suing again.

“I will say that the trends to me are disturbingly looking like they looked prior to 2006,” Thompson said. “We have funding for schools that is arbitrary and not rational and not related to the standards we’re trying to accomplish. We have growing equity gaps in some places.”

You want to make a sure-fire bet on something? Bet on there being another school finance-related lawsuit in the coming decade, quite possibly in the early part of it. And before you say “well, maybe we can do more cuts on the health and human services side”, let me say three words to you: Frew v. Hawkins. It’s lawsuits all the way down. Fixing the revenue side of the equation is the only way out.

Watch out for Medicaid

A wrench just got thrown into the budget reconciliation negotiations.

Forecasts that more Texans battered by the recession will qualify for free health care under the Medicaid program will require that the program receive nearly $1 billion more in state funds, Lt. Gov. David Dewhurst announced today.

“One cloud has arisen,” he said, updating reporters about House-Senate budget talks. Though the Senate inserted $750 million more of state money into the two year, $182 billion budget for Medicaid enrollment and cost growth, Dewhurst said the Legislative Budget Board now thinks the figure should be closer to $1.75 billion. The House didn’t put any money into its budget for Medicaid enrollment and cost growth.

Senate Finance Committee Chairman Steve Ogden, R-Bryan, said he expects lawmakers will have to find more money for Medicaid in both the 2010-2011 budget and an emergency spending bill plugging holes in the current budget.

“There’s less money today than we thought there was … a week ago for new stuff,” Ogden said.

Hard to say right now what effect this is going to have, but it sure makes that House vote to exempt more businesses from the margins tax feel like bad timing. Earlier in the session Sen. Van de Putte had questioned the amount of money set aside for Medicaid under the Frew ruling, but this appears to be separate from that. The thing to watch out for here is using the Medicaid shortfall as an excuse to gut a whole bunch of appropriations. I have a bad feeling about this. Postcards has more.

House panel passes its budget

The House Appropriations Committee takes care of business.

House budget writers today backed a $178.4 billion, two-year state budget that would give a $1,000 bonus to state government employees [who make less than $100,000 a year], retired teachers and retired state employees.


It would give more to college grants than the Senate budget proposal approved last week. Unlike the Senate measure, it also would definitively provide for funding an expansion of the Children’s Health Insurance Program if separate legislation passes (the Senate would give a CHIP expansion a chance at funding).

At the same time, the House committee proposal is nearly $4 billion less than the $182.2 billion Senate measure.

Among key differences, the House measure gives about $2 billion less for road bonds and less for cancer bonds, said Appropriations Chairman Jim Pitts, R-Waxahachie. It also has a far lower estimate for Medicaid costs and caseloads, making up the bulk of the difference.

The House bill also would put tighter strings on trust funds overseen by Gov. Rick Perry, who stirred Pitts’ ire when he engineered a $50 million transfer from the enterprise fund to the emerging technology fund for a Texas A&M University System biotecnology center.

As you know, I thought the Senate budget wasn’t too bad, certainly a lot better than I thought it would be coming into the session. From what I see here, the House budget improves on it, though I’m leery of the lower cost estimate for Medicaid. Still, more for CHIP and tighter controls on Governor Perry’s slush fund – what’s not to like about those things?

Floor Pass, which says the whole House will debate the budget bill on April 17, has more.

The House’s version includes $11 billion in federal stimulus funds. But wait! Wasn’t Texas supposed to get, like, $16 billion? Calm down there, pardner. Some of the stimulus funds flow directly from the feds for local appropriation and some of the stimulus funds have been appropriated to the 2008 – 09 biennium, as some of the money will already have been spent by the end of this year.

More details on the budget will be forthcoming soon. Is it possible that this won’t represent the biggest battle of the session? I’m not sure what that would say about this session if it turns out to be the case. Postcards has more.

UPDATE: BOR says the budget process is proceeding in at least as timely a manner as it did in 2007, but it could still get derailed.

Senate passes budget

The good news is that the budget presented by the Senate isn’t a big step backwards, which was a real concern given the bleak financial picture and the huge obligation of the property tax cuts, which we continue to be unable to fully pay for. As we know, we have the federal stimulus funding to thank for all of this. The bad news is that the Senate budget is not a step forward either, and it’s not clear that much of those federal dollars will be used in a way that’s actually stimulative.

As it stands, the budget proposal would increase funding for college aid, but not nearly enough to cover all students eligible for Texas grants. It would increase money for human services, but it wouldn’t expand eligibility for the Children’s Health Insurance Program.

Among spending highlights, it would pour more money into community services for people with disabilities.

Public schools would get a boost, with some funding tied to separate finance system reforms. Universities and health-related institutions would get an increase.

Correctional officers would get pay raises, and a teacher incentive pay program would get an infusion.

The proposal also would increase funding for regulatory agencies to ensure they can properly do their jobs, a move budget-writers advocated because they said insufficient oversight contributed to national economic problems.

Budget supporters also addressed the controversial question of funding for embryonic stem-cell research. Before the Senate’s 26-5 vote approval, Senate Finance Committee Chairman Steve Ogden clarified that his proposal only would prohibit money appropriated by the state budget from being used directly for research that involves the destruction of a human embryo. It would not ban such research.

Overall, the budget sought to balance spending on crucial services and saving for expected harder times to come. Backers said the budget makes progress and critics said it doesn’t go far enough to address critical needs.

There also were questions over whether the budget properly uses nearly $11 billion in stimulus funding for the fiscal period that starts Sept. 1.

About half of the stimulus money would substitute for state funds that otherwise would be needed. That raised questions because the proposal leaves untouched a state savings account known as the rainy day fund. That account is expected to grow to $9.1 billion in a couple of years.

I have some sympathy for Ogden’s position about not spending the money in the rainy day fund, given that sales tax revenues being collected now will be the basis of the next budget. Given how awful I thought this budget was going to be when the session first began, I almost feel a sense of relief at the way it has turned out so far. On the other hand, given how reluctant a lot of Republicans were to dip into the rainy day fund for just about everything, even hurricane relief, before we knew there would be enough federal money to cover whatever we needed, I can’t say I have much faith that we won’t be in an equivalent position in two years’ time, only without any assistance from DC. And I know that the top priority of the Republicans will be maintaining those irresponsible property tax cuts. I’m glad to avoid the problem for now, and I’m glad that the usual budget victims escaped mostly unscathed, but I totally understand why those five Senators (all Democrats – Ellis, Gallego, Watson, Shapleigh, and Davis) voted no.

Of course, this isn’t the final word, not by a longshot. The House still has to do its thing, and then there will be a committee to reconcile the two. As noted at the end of this story, among other things that could mean the Ogden stem cell rider, which was kinda sorta clarified, could be taken out. Here’s Patricia Kilday Hart on what that rider now says:

“I have recently passed around what I think might be better language” which he will substitute in conference committee, Ogden said. The revised rider would prohibit the use of state money “to directly fund embryonic stem cell research” until the state Legislature passes “legislation regulating embryonic stem cell research.”

He said adding the word “directly” would mean that researchers at state universities could continue their work if it is funded by other entities. Opponents of the original rider had been concerned that embryonic stem cell researchers would no longer be able to work in state-supported institutions.

The process by which that rider made it into the budget in the first place was still lousy. I do hope it winds up on the cutting room floor.

One last issue with the budget has to do with money for the Frew settlement. Here’s Kilday Hart again:

Sen. Leticia Van de Putte believes the Senate Finance Committee failed to include enough money in SB 1 to cover the state’s obligations under the settlement of the Frew v. Hawkins lawsuit, in which the state agreed two years ago to significantly improve access to Medicaid services. And she lays the blame for the failure at the feet of Attorney General Greg Abbott’s office.

Van de Putte notes that Frew plaintiff’s attorney Susan Zinn has sent two letters — one dated Jan. 27 and one dated March 16 — to the AG’s office advising it of non-compliance with a 2007 agreement, particularly with a promise to spend $150 million on “strategic initiatives” to increase participation by children in Medicaid services — primarily by increasing participation by health care providers. Zinn’s letters to the AG noted that the Legislative Budget Board’s funding recommendations for the next biennium do not comply with the court order. Van de Putte says Zinn has received no response from the state to her letters.

Further, she said, Senate budget writers were not advised of the plaintiff’s concerns. ”To my knowledge, (no one) in Finance or leadership was given those documents showing what was needed to be compliant,” she said. “There was a disconnect.”

If lawmakers fail to fully fund the settlement, “we will be in violation” of a federal court order, Van de Putte noted. “Our attorneys failed to communicate to budget writers.”

Let’s hope there are no nasty surprises lurking in there. Here’s a statement from Sen. Eliot Shapleigh, one of the No votes, and a statement from Sen. Van de Putte, who voted Yes with reservations, is beneath the fold.

UPDATE: Floor Pass has a nice recap of yesterday’s Senate budget action.