TMA Testimony on HB 13 Interstate Compact

Testimony: House Bill 13 (82nd-1)

Written Testimony to the House Appropriations Committee 
Friday, June 3, 2011  

On behalf of the Texas Medical Association thank you for the opportunity to provide input on House Bill 13 (82^nd-1), which calls for the development of an 1115 federal waiver to give Texas greater flexibility in the design and operation of its Medicaid program. We certainly appreciate Medicaid is fraught with complexity and beset by often Byzantine rules and regulations that cause even the most ardent supporters to wring their hands in frustration. However, we believe there are opportunities to make the program more responsive to the needs of patients, physicians and the state. We also believe more must be done to constrain Medicaid costs, which is why we support implementing new delivery and payment models, as envisioned by Senate Bill 7 (82nd-1), that reward the provision of better, more coordinated health care.  While Medicaid can certainly be made better, we also do not want to “throw the baby out with the bath water”. More than three million Texans rely on Medicaid for needed medical and long-term care services. Without Medicaid, the vast majority of Medicaid enrollees would be uninsured. Further, Medicaid also contributes billions of dollars to support the state’s health care infrastructure, on which all Texans ultimately benefit and depend.  Any effort to redesign Medicaid must ensure that Texas maintains broad coverage and adequate funding to meet the needs of a booming state.    

Outlined below are some of our questions and concerns about the proposed waiver.   

• The bill states that Texas would pursue increased flexibility with regards to determining eligibility and benefits.  However, the bill does not elaborate on what new levels of eligibility or benefits would be implemented. Our constituencies would like reassurance that the redesign would not alter eligibility in ways that would reduce coverage or increase the state’s already high rate of uninsured.   
• The bill states that Texas would seek to encourage the use of the private health insurance in lieu of public programs as a means to provide coverage.  The vast majority of Medicaid enrollees, some 85 percent, live in families with incomes at or below 100 percent of poverty.  This equates to $22,350 for a family of four. At this income level, only about 14 percent of Texans have access to employer-sponsored insurance. Without a full subsidy, most low-income Texans could not afford to purchase private coverage on their own.  
• Further, many Medicaid enrollees, including patients with disabilities or chronic conditions, are uninsurable in the private market under usual commercial underwriting standards.  Even if the state were to require that health insurance be available via “guaranteed issue”, the costs of commercial coverage in the current marketplace would be prohibitive for patients with pre-existing conditions, again unless the state provided a full subsidy.  The benefits provided by private insurers also may not be sufficient for some Medicaid populations, including children, who benefit not only from Medicaid’s coverage of medical services, but also dental, hearing, and vision care, as well as patients who require long-term care services and supports.   
• Although health savings accounts (HSAs) represent a valuable innovation for higher income businesses and individuals, an HSA model would be difficult to implement for the majority of the Medicaid population.  As noted above, 85 percent Medicaid enrollees have incomes at or below 100 percent of poverty. For poor families struggling to make ends meet, funding an HSA would simply not make financial sense and may result in patients foregoing needed care.  To promote personal responsibility, we do support evaluating the HSA model for higher income populations and also the use of nominal, sliding scale copayments for Medicaid enrollees.   
• HB 13 envisions obtaining a block grant to fund Texas’ Medicaid program. On a per capita basis, Medicaid spending is similar to that in the private sector but actually lower than Medicare, all while covering a very diverse and complex population. The rapid growth in Medicaid spending in recent years is largely attributable to increased caseload fueled by a deep and protracted recession. In order for a block grant to adequately fund Texas’ Medicaid program, the state would need to secure funding sufficient to cover not only annual medical inflation, but also caseload.  Caseload growth is notoriously difficult to accurately predict since it is driven by a mix of factors, including the state’s demographics, population growth, and economic conditions. Given the current federal fiscal environment, it is by no means certain that Texas could negotiate a block grant favorable to a rapidly growing state.    

A recent study examined the federal Medicaid block grant program and its impact on states over a 10-year period. It found that Texas could experience a decline in excess of 30 percent in funding through a federal block grant. This study is an important guide post. We must take every step necessary to ensure this does not happen in Texas. And, that Texas and the Medicaid patients it serves receive a fair and appropriate share of any federal block grant.   

• Given the scope of changes envisioned under the waiver, it will be imperative that Texas establish a robust stakeholder process to ensure appropriate public input. We strongly support the establishment of a legislative oversight committee to seek public input on the waiver design and to work collaboratively with the Texas Health and Human Services Commission on its development.  

Thank you for your consideration.  We look forward to continuing to work with you to make Medicaid more efficient, accountable, and responsive to all Texans who benefit from it every day.  

82nd Texas Legislature Testimonies