Texas must provide access to affordable health care and an
appropriate medical home to all of our residents. We must focus our
efforts on working poor families - the uninsured and underinsured.
This is the critical intervention, the lynchpin, of
TMA's Healthy Vision 2010
. We must reduce dramatically the mounting rolls of uninsured
Texans and the unrelenting pressure they apply to
government-financed health care programs, safety net hospitals and
emergency rooms, private practice physicians, and employers and
employees who buy health insurance. Without this crucial change, we
are just tinkering at the edges. Without universal access to
affordable care, none of our other treatment recommendations can
achieve their true potential.
Texas' health professionals must collaborate with the business
community, public and private payers, employers, and employees to
devise and test initiatives that make health insurance companies
offer coverage that is more broadly accessible, affordable, and
By and large, uninsured Texans are working Texans. Many of their
employers - small and large businesses - can no longer afford to
offer health insurance benefits. With no realistic alternatives
available, the employers simply drop the benefit and leave the
employees and their families to fend for themselves. Those
families, likewise, have little choice but to "choose" to be
TMA supports public policy initiatives that will expand
employers' and employees' options. These include:
Offering a supportive environment in which stakeholders feel
free to develop and pilot-test basic benefit packages that can
meet the health care needs of targeted employee populations.
These could include combinations of health savings accounts,
preventive care coverage, and catastrophic care coverage. We
must test variations in premiums, copays, deductibles, and
benefits to find the optimum configurations.
Exploring variations on "3-share" programs such as that
currently proposed for Galveston County, where The University
of Texas Medical Branch is developing a health benefit program
to provide coverage and improved access to care for the
county's working uninsured. Like the name sounds, the 3-share
plan divides the costs of care three ways: among the employer,
the employee, and government funds. A 3-share plan is designed
specifically for small businesses unable to purchase group
insurance at affordable rates.
Allowing Texas families who are ineligible for Medicaid or
the Children's Health Insurance Program (CHIP) to buy in to
those government-run programs. Another option is the
TMA-supported legislation passed in 2003 that encourages
blending Medicaid funds with employer subsidies to purchase
affordable health insurance for uninsured workers. Texas should
consider expanding this initiative and exploring other
TMA also supports incentives for businesses to provide employee
health insurance, including workers' compensation coverage, when
the businesses contract with the state or receive state economic
development funds. State government offers a variety of incentives,
including hundreds of millions of dollars in grants, loans, and tax
credits, for businesses to move to or grow in Texas. Local units of
government also use property tax abatements to lure new businesses.
State government itself awards contracts each year worth billions
of dollars to various vendors. All these incentives and contracts
include provisions with which the business or vendor must agree to
comply. TMA recommends for consideration:
Establishing tax incentives for businesses that contract
with the state or receive state economic development funds to
provide health insurance and workers' compensation coverage for
Rewarding businesses that offer health insurance
compensation coverage for their employees, and establishing tax
incentives to encourage more businesses to do so.
For these public-private partnerships and innovations to work,
Texas must impose no additional burdens on health care financing,
including no new taxes on patient care. Taxing patient care is bad
medicine. It will cost our state jobs in the health care sector and
hurt our economy. Health care is a vital component of Texas'
economy, generating tens of billions of dollars in revenue per year
and providing hundreds of thousands of jobs. The cost of health
care is high enough. New taxes on health care would drive those
costs even higher or be an unrecoverable expense that would force
more Texas doctors out of practice and worsen our state's
Moreover, a robust medical system is vital for continued
economic development in our state. Without a healthy workforce or
ready access to high-quality medical care, Texas cannot attract new
industries and employers. TMA recognizes that a sound public school
system is essential to developing the physicians of tomorrow and
that a well-educated Texas is a healthier Texas. However, a healthy
Texas requires healthy physician practices. Increasing expenses and
falling reimbursements already threaten the viability of many
Ethically and legally, physicians must provide emergency care
without inquiring into the patient's ability to pay. Texas
physicians already pay a $1-billion-per-year hidden tax via
unreimbursed charity care. This equates to a $1 billion savings to
Texas taxpayers. Medicaid and CHIP payments to Texas physicians
cover less than half the cost of providing care. The average Texas
family practice physician loses about $50,000 per year in
undercompensated care for Medicaid patients. For many specialists,
in rural Texas and along the Texas-Mexico border, this figure is
TMA strongly opposes any new taxes on physicians or medical
Texas must direct more of our precious health care dollars into
direct patient care.
For much of the 1990s, managed care organizations and other
insurers kept rates artificially low to attract new clients and
members. The HMOs and PPOs obtained profits for their shareholders
by severely limiting utilization and systematically ratcheting down
reimbursements to physicians, hospitals, and health care providers.
Once these tactics had been exhausted, health plans implemented
double-digit premium increases so that premium inflation far
outstripped the already soaring inflation rate for health care
The important measurement to focus on is the medical loss ratio.
This is how the insurance industry defines the share of the premium
dollar that actually goes for health care. In 2000, the national
medical loss ratio was 84.8 percent: 84.8 cents of every premium
dollar paid for actual care. That number declined to 81.5 cents by
2003. Unfortunately, the trend continues. United Healthcare,
PacifiCare, WellChoice, and Coventry all recently reported
continued "improvements" in their medical loss ratios - and their
profits. Aetna stated a 78.6-percent commercial medical cost ratio
for the third quarter of 2005.
In addition, the plans independently define what is included in
their medical loss ratio. The industry has realized considerable
success in convincing employers and major purchasers that many
costs not directly involved with providing care still should be
counted as such. The health plans argue that certain nonclinical
expenses amounting to cost controls should be counted as the cost
of patient care. Thus, they include in the medical loss ratio costs
for such activities as maintaining records, supervisory and
executive duties, and supplies and postage.
While the plans are spending a smaller share of the premium
dollars they collect on actual patient care, they have become
significantly more profitable. Collectively, the country's six
largest health plans made nearly $2.4 billion during the first half
of 2002, far more than the $1.8 billion they earned during all of
2001. In 2004, U.S. HMOs reported a 10.7-percent increase in
Like all other HMOs operating in Texas, Medicaid HMOs pay the
state a 1-percent premium tax. However, that tax is an allowable
administrative cost for the Medicaid HMOs. The state actually pays
them back for the premium tax.
To ensure that we spend more of the Texas health care dollar on
health care, not elsewhere, TMA recommends:
Requiring all managed care organizations to report and
explain Texas medical loss ratios to purchasers and enrollees
Establishing standard data elements for reporting medical
loss ratios to allow for accurate comparisons among various
health plans and workers' compensation carriers.
Establishing reasonable medical loss ratios for Medicaid
HMOs, which are paid using state tax dollars.
Establishing reasonable medical loss ratios for workers'
Requiring the Texas Department of Insurance to regulate
Medicaid HMOs as it does commercial HMOs.
Protecting a patient's right to make treatment decisions in
consultation with his or her physician.
On the public side of the equation, we need fair reimbursement
rates to stop the exodus of physicians from Medicaid, CHIP,
Medicare, and workers' compensation.
Medicaid and CHIP are essential elements of Texas' economic
development. A 2003 study by Texas economist Ray Perryman, PhD,
found that together, Medicaid and CHIP contribute nearly $31
billion to the gross state product and produce almost 500,000 jobs.
Medicaid payments cover less than half the cost of providing
services. Many physicians' practices, which are small businesses,
cannot maintain their viability in the face of increasing expenses.
Physician participation in Medicaid is dropping steadily and is
perilously low in many parts of the state. Fewer than half of Texas
physicians accept new Medicaid patients. The most severe shortages
are among subspecialists, particularly those who treat
Patients' medical needs don't disappear just because the state
cuts services and reimbursements. Local governments spend
substantial tax dollars on health care for uninsured or
underinsured patients. State Medicaid cuts increase the burden on
local taxpayers. For every $1 Medicaid and CHIP cut, Dr. Perryman
found, Texas loses $19.14 in business activity, local taxes jump 51
cents, and insurance premiums rise by $1.34.
Medicare payment increases for other providers have closely
paralleled the Medicare Economic Index, which is Medicare's measure
of the increasing costs of providing medical services. Physician
fees, however, have fallen well behind the Medicare Economic Index
and will trail the index further still in future years.
For the past 15 years, Medicare physician payment rates have
fallen further and further behind the cost of running a medical
practice. Today, Medicare reimburses a physician about two-thirds
of what it costs to provide care to a patient. Every time Texas
physicians see a Medicare patient, they actually lose money - an
average of $20 to $35 on every typical office visit.
The problem is only going to get worse. The baby boomers, the
biggest generation in American history, are about to enter
retirement age. Millions of new Medicare patients will need medical
care that Texas physicians very well may not be able to afford to
Like any other business, a physician's practice cannot survive
if costs exceed revenues, and Medicare payments are not adequate to
cover average costs. Therefore, fees paid by private payers must be
increased to cover physician losses on Medicare beneficiaries. When
private payers are unwilling or unable to pay higher prices to
cover these costs, physicians are forced to discontinue or
drastically reduce their Medicare business, thus jeopardizing
In the area of workers' compensation, costs, reimbursement
rates, and access to care for injured workers have been flash
points of debates among medicine, business, labor, and state
government since 2001. Texas' cost-per-injured-worker claim is
higher than other states, primarily due to poor return-to-work
patterns and a high frequency of medical service utilization by
some providers. Average price-per-service for physician services
was at or below the median in 1999, before the Texas Workers'
Compensation Commission imposed fee schedule cuts.
Price-per-service for chiropractors, physical and occupational
therapists, and hospitals, however, was above the median.
Due to the high administrative burden and low reimbursement rate
for workers' compensation, the number of physicians who accept new
injured workers plummeted from 46 percent in 2002 to 23 percent in
TMA's primary goal for workers' compensation is access to
quality care for injured workers. The 2005 Texas Legislature passed
House Bill 7 to reform the workers' compensation system. The bill
allows for managed care-style workers' compensation networks, where
participating physicians may negotiate their fees; out-of-network
services will remain at 125 percent of Medicare allowable. The bill
also applies some prompt pay provisions similar to group health
standards. The new law guarantees payment up to $7,000 when
compensability determination is challenged by a carrier. In the
previous system, many physicians were left with no recourse when an
injured employer claimed a work-related injury and the carrier
later determined that the injury was not work-related.
Managed care networks are not a silver bullet that will fully
reform the failed workers' compensation system in Texas. Under the
new system, which is supposed to be based on market principles,
physicians may negotiate fees with payers without regard to a fee
schedule. The intended effect is for networks to attract quality
physicians and to pay them appropriate fees for delivering quality
services. There is growing concern, however, that insurance
carriers will use this flexibility to push reimbursement even
lower, further threatening injured workers' access to quality
TMA's recommendations for fair reimbursement rates include:
Enacting competitive physician reimbursement rates for
Medicaid and CHIP.
Restoring Medicaid and CHIP services and eligibility to 2003
Replacing Medicare's sustainable growth rate formula with
the Medicare Economic Index, which would allow payment adequate
to cover physician costs.
Monitoring workers' compensation fees to ensure that they at
least cover the cost of patient treatment and the unusually
high administrative burdens inherent in the system.
As the 2005 legislature was convening, state Medicaid officials
were ready to repeal the popular Primary Care Case Management model
(PCCM) and expand STAR+PLUS Medicaid HMOs to serve the elderly and
patients with disabilities living in and around the state's urban
counties. Local counties were about to lose hundreds of millions of
federal dollars. Harris County, where Texas piloted STAR+PLUS, lost
some $35 million as a result of the model and stood to lose another
$20 million. Other urban counties - Dallas, Bexar, El Paso,
Lubbock, and Tarrant - would lose at least $150 million
Faced with strong arguments that Medicaid HMOs are good for
neither the health of patients nor the health of local economies or
taxpayers, lawmakers decided to test an alternative. Integrated
Care Management (ICM) is a noncapitated system of care that would
achieve statewide savings and tax equity, maximize federal Medicaid
matching dollars, provide high-quality and effective patient care,
and simplify administration. The legislature required the use of
ICM in Dallas and authorized it as an option in the other urban
The state is moving ahead with plans to eliminate the PCCM model
and use only HMOs to provide Medicaid services in and around most
Texas urban areas. All patients who rely on Medicaid there -
pregnant women, children, elderly men and women who don't live in
nursing homes, and adult patients with disabilities - would have no
choice but to seek care from HMOs.
PCCM and ICM are good values for the state. They put more money
into direct patient care and spend less on paperwork and
administration. PCCM receives very high marks from both patients
To improve Medicaid care, TMA recommends:
Directing the Texas Health and Human Services Commission to
contract for an objective, third-party cost-benefit analysis of
all Medicaid managed care delivery models, and require a
legislative oversight panel to monitor the findings and their
implementation. Any analysis of cost-effectiveness should
include the impact on local taxpayers, hospital districts, and
the health care safety net.
Conditioning any further expansion of for-profit Medicaid
HMOs on a clear expression of community need.
Offering ICM - or another patient-centered,
physician-directed model that relies on more efficient managed
care principles to improve care coordination, assure
appropriate utilization of services, and restrain costs - in
all Medicaid service areas.
Reenergizing physician participation in Medicaid by
establishing a system that represents true collaboration
between physicians and the state.
Transparency is a basic tenant of American business. "Let the buyer
beware," certainly. But the buyer must know what to be wary of. As
health care transactions among patients, physicians, hospitals,
employers, health plans, and others grow even more complex, the
various buyers and sellers of health care services must take extra
pains not to mislead each other. Texas physicians call on all
stakeholders to operate openly through appropriate disclosure,
which (1) does not compromise the patient-physician relationship,
(2) makes transactions more fully understandable at the point of
service, and (3) facilitates communication among patients,
physicians, other providers, purchasers, and plans.
To ensure that physicians' interests are always aligned with
their patients', TMA continues to oppose any efforts to change
Texas' longstanding prohibition against the corporate practice of
medicine. Physician "employees" should not be held responsible for
the bottom line of an organization managed or owned by
To ensure transparency, TMA recommends:
- Requiring physicians to disclose to patients any ownership
interest in a facility or service. TMA supports physician
ownership in technology facilities, services, and equipment.
Referrals to physician-owned entities or services must be based
on the patient's medical needs, as determined by accepted
utilization and quality-of-care standards.
Requiring hospitals, health plans, and others to disclose to
patients any ownership interest in a facility or service.
Requiring health plans to provide employers, patients, and
other purchasers with accurate, up-to-date lists of contracted
physicians, hospitals, and other facilities. They must point
out especially any contracted hospital for which the plan lacks
adequate physician specialists, such as anesthesiologists,
emergency medicine specialists, pathologists, and
Directing the Texas Department of Insurance to develop and
enforce stricter rules requiring health plans to provide their
members with adequate physician networks.
Requiring health plans to use credible, reliable,
understandable, and transparent evidence-based tools to measure
quality, cost-effective care. They must share their measurement
criteria openly with physicians, patients, and purchasers.
Prohibiting health plans from using costs - or tools that
cannot measure quality of care - as factors when developing
networks they promote as providing higher quality care.
Texas must build an adequate, homegrown supply of appropriately
At 218 physicians per 100,000 population, Texas already trails the
national average of 281 physicians per 100,000 by 22 percent. The
federal government designates 132 of Texas' 254 counties - mostly
in rural West Texas, along the border with Mexico, and in inner
cities - as primary care Health Professional Shortage Areas. These
counties are home to more than 5.4 million Texans. This diminished
access to physician care will grow worse as Texans age and the
population grows. While Texas State Demographer Steve Murdock
predicts that the number of Texans will grow by almost 143 percent
from 2000 to 2040, he likewise predicts that the number of
physician contacts will increase by 170 percent.
Compared with the general population, Hispanic and
African-American physicians are especially underrepresented. That
discrepancy, too, will grow wider over the next quarter-century as
Hispanics become the majority in Texas.
Each year, Texas' eight medical schools graduate about 1,300 new
physicians. TMA strongly supports the schools' efforts to achieve
more diverse student populations and to motivate and prepare
students to practice in underserved areas of the state.
To help meet the demand for physician services, TMA
Encouraging the state to partner with Texas medical schools
to increase the representation of Hispanic and African-American
medical students toward the goal of reaching their proportion
in the Texas population.
Increasing state funding for medical education to provide
incentives for medical schools to increase enrollment of
Increasing state funding to increase the number of medical
schools in Texas and/or increase class size at our current
Expanding medical student clerkships in rural medicine and
loan repayment/forgiveness programs for students who practice
in underserved areas of the state.
Graduate medical education (GME) is the specialized training
physicians receive after completing medical school. It is a lengthy
period of time during which they immerse themselves in learning a
specific field of medicine. GME programs play an important role in
giving physicians the skills they need to become independent
practitioners; in providing patient care, often to the most needy;
and in improving the health of all Texans through medical research
and innovations. An investment in GME is an investment in the
health of Texans and our economy.
Teaching hospitals are concerned about their ability to sustain
- let alone expand - GME programs due to narrow operating margins
and low financial reserves. This is largely due to the recent
whittling-away of GME funding sources. Medicare is the largest
financier of GME. The number of Medicare-supported GME slots is
generally frozen at 1996 levels. In Texas, most state GME funds are
allocated by the Texas Higher Education Coordinating Board for
primary care GME. In 2003, the legislature cut $27 million of the
Coordinating Board's $51 million in GME funding. The 2005
legislature restored those funds but made none available to allow
for needed growth. Medicaid's longstanding role in support of Texas
GME was eliminated for 2004-05 - a loss of $127 million in state
and federal matching funds. Legislators in 2005 approved the
first-ever state GME formula funding process but were unwilling to
finance Medicaid GME with general revenue funds. Instead, they
established a funding system that is not expected to restore the
To strengthen GME, TMA recommends:
Funding the newly established state formulas for GME at
Reinvesting state funds in Medicaid GME.
Texas must invest in the public health infrastructure needed to
protect the public in response to natural disasters, epidemics, and
Texans discovered a whole new meaning of the word "homeless" when
our state absorbed more than 300,000 evacuees from Hurricane
Katrina. Although we welcomed our displaced neighbors from
Louisiana and Mississippi, their rapid, unplanned arrival strained
local and state health care resources. During Hurricane Katrina,
emergency response, health care, and sheltering fell primarily on
our large urban areas. These are highly populated cities with a
large tax base and extensive health care facilities.
Much of the weight of responding to Hurricane Rita, however,
fell on smaller, rural towns and counties in Texas that had never
responded to a disaster of such magnitude. The deluge of evacuees,
many of them individuals with special needs who were intentionally
moved out of the storm's path, initially overwhelmed local
governments. While Texas responded with a well-defined plan,
certain shortcomings became readily apparent. In many cases, the
chain of command was not clear. Local government agencies weren't
certain of their responsibilities. Communication among those on the
ground in East Texas, state and volunteer coordinating agencies,
and medical volunteers was fractured and difficult. Local
governments, hospitals, and health care workers could not keep up
with the demands at special care shelters. Those who wanted to
volunteer found it difficult and sometimes impossible to get to the
areas of greatest need.
To improve our ability to respond to the next disaster, TMA
Studying and updating our state and local disaster response
plans with special attention to improving communication among
responders at all levels; providing public health surveillance
in shelters; tracking specific populations (e.g., severely ill
patients, individuals with disabilities, sex offenders,
methadone patients) to improve their access to special
services; and improving evacuation routes and plans.
Ensuring that the Texas Department of State Health Services
(DSHS) involves county medical societies in its disaster
Scientists, health care professionals, and federal and state
governments have focused their recent attention on preparing for a
possible influenza pandemic. On average, three influenza pandemics
occur in a century; the most recent was in 1968. DSHS defines
pandemics as "explosive global events in which most, if not all,
people worldwide are at risk for infection and illness [from] a new
strain of influenza against which there is little or no natural
The federal government's pandemic response priorities include
ways to increase vaccine production capacity and limit vaccine
manufacturers' liability. The Bush administration has asked state
and local governments to develop plans for stockpiling and
distributing vaccines and antiviral medicines, for tracking disease
outbreaks, and for quarantining infected individuals in the event
of an outbreak. DSHS has developed a draft state plan for pandemic
influenza that addresses these issues and more.
To better prepare Texas for a pandemic, TMA recommends:
Urging the Texas Department of State Health Services to
complete and test its state plan for pandemic influenza.
- Appropriating sufficient funds to update the plan
periodically and implement it rapidly in response to a flu
Goal 2: Increased Prevention and Personal
Texas Department of State Health Services. DSHS Plans for Pandemic
Influenza. Accessed October 2005 at