Desperate Times

  Budget Crisis Drives Medicaid Reform Effort

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Cover Story – May 2011

Tex Med. 2011;107(5):18-26.

By Ken Ortolon
Senior Editor

Medicaid costs are crushing the state budget to the point where officials are willing to try just about anything to ease the burden. Over the past several sessions, lawmakers turned over much of the health care program for low-income Texans to managed care companies, established a preferred drug list, and sought waivers from federal rules to cut spending or bring more federal matching dollars into a program that chews up roughly one quarter of the state's budget every two years. 

A lingering recession that swelled Medicaid enrollment, a state budget shortfall that could top $27 billion, and the fact that health system reform will require significant expansion of Medicaid in Texas and across the country if it holds up in court combined to create urgency about improving Medicaid's efficiency and effectiveness in this year's legislative session. But some health policy experts have concluded that the Texas Medicaid program simply is unsustainable in its current form. 

Texas Medical Association President Susan Rudd Bailey, MD, says TMA has sought to "work collaboratively with lawmakers to find practical and thoughtful solutions to Medicaid funding that won't harm patient care."

Toward that end, TMA has submitted recommendations to legislative budget writers for measures that would save enough money to prevent lawmakers from having to slash payment rates for physicians and other providers. Among those recommendations are strategies to reduce unplanned pregnancies and the rate of low-birth-weight and pre-term babies, increase medical homes for Medicaid patients, and reduce inappropriate use of hospital emergency rooms for nonemergency care.

Former state Rep. Arlene Wohlgemuth, executive director of the conservative Texas Public Policy Foundation (TPPF), says TPPF estimates Medicaid could consume nearly half the state budget in 2014 and 2015 unless there is major reform. 

"When you take a look at the Medicaid program, two things jump out at you," said Ms. Wohlgemuth, who also is director of TPPF's Center for Health Care Policy. "One is the unsustainability of the cost." 

She says TPPF research indicates Texas needs an additional $14 billion in new general revenue for Medicaid in 2014-15, thanks to historic caseload growth and the Affordable Care Act (ACA) expansions, pushing Medicaid costs to nearly half the state budget. ACA is the health system reform bill Congress passed last year. 

"And the second thing that jumps out at you is the inflexibility of the state to deal with the program. You can't get the kinds of savings that are needed and deliver the kind of care that is needed within this current structure." 

Anne Dunkelberg, associate director of the progressive Center for Public Policy Priorities, agrees that Medicaid could be more efficient. But once officials "get past the buzz phrase of flexibility," they have to start thinking about what they want to change, she says. Because Texas provides very few optional benefits in its Medicaid program, there is little that could be cut without doing real harm to eligibility or benefits, she adds. 

Already, a number of fairly radical ideas to rein in Medicaid costs have been floated. Late last year, Gov. Rick Perry suggested that Texas look into dropping out of Medicaid, which is a voluntary program for the states. That idea was met with little enthusiasm, given the massive loss of federal funding that would ensue. 

The governor also proposed seeking a waiver to receive federal Medicaid funds as a block grant, giving the state more say over how the funds would be spent. 

Also, Senate leaders filed legislation that would fundamentally alter how care is delivered and paid for in the Medicaid program. And, TPPF has laid out a plan that would shift Medicaid from a "defined benefit" program to a "defined contribution" program -- essentially providing state subsidies to enable Medicaid beneficiaries to go out and shop for their own private insurance. 

While all sides in the Medicaid debate seem to agree the state could use more flexibility to redesign its Medicaid program, there is little agreement that any of the proposed solutions is the right fix to a massive budget problem. 

The Big Driver

TMA officials say the deficit is really driving the calls for radical changes to the Medicaid program. 

"The states see the program as being unsustainable because it's such a large part of a budget, and most of the states are having trouble balancing their budgets as a result of continuing economic malaise," said San Antonio pulmonologist John R. Holcomb, MD, chair of TMA's Select Committee on Medicaid, CHIP, and the Uninsured.  

Medicaid caseload growth fuels most of the increased costs, as people seek coverage after a family member loses his or her job. Faced with a shortfall of about $4 billion for the current biennium, state leaders have already directed the Texas Health and Human Services Commission (HHSC), which administers the Medicaid program, to cut fees for physicians, hospitals, nursing homes, and other providers by 2 percent. 

At press time, Governor Perry and House leaders had agreed on a plan to use $3.2 billion from the state's Rainy Day Fund to help fill in the hole in the 2010-11 budget. 

The baseline budget bills for 2012-13 proposed by House and Senate budget writers in January further cut physician and provider rates by 10 percent across the board. Their proposals included eliminating the physician education loan repayment programs designed to encourage young doctors to take Medicaid patients and to practice in underserved areas, expanding Medicaid managed care to the Lower Rio Grande Valley, and cutting optional Medicaid benefits, such as hearing aids and eyeglasses for seniors. 

Helen Kent Davis, director of TMA's Office of Governmental Affairs, says those bills did not replace federal stimulus dollars used to plug a Medicaid funding gap in the current budget, nor do they account for expected Medicaid caseload growth. That means budget writers are about $7.5 billion short of the funds they need to cover expected caseload. 

"They're trying to squeeze more savings from Medicaid by restructuring how hospitals and Medicaid HMOs are paid and improving the quality of care provided to moms and babies," Ms. Davis said. "They're not going to find $7.5 billion, but there are potentially some efficiencies they can implement that will generate close to another $1 billion in general revenue savings." 

A subcommittee of the Senate Finance Committee solicited cost-saving ideas from a wide range of advocacy groups, including TMA. Among recommendations TMA submitted were proposals to:   

  • Reduce unplanned pregnancies by simplifying enrollment in the Women's Health Program and expanding outreach; 
  • Lower inappropriate use of neonatal intensive care units through evidence-based clinical best practices and targeted utilization management strategies; 
  • Implement strategies to reduce low-birth-weight and preterm babies; 
  • Implement a coordinated patient education and home visitation program for patients with asthma; and 
  • Expand use of managed care, accompanied by new statutory provisions to hold health plans accountable for improving availability and quality of care.   

In addition to the statewide rollout of Medicaid managed care, that panel considered establishing copayments for nonurgent emergency department visits, limiting drug benefits for adult Medicaid beneficiaries, cutting podiatry services for everyone except patients with diabetes, and more. 

But some observers say those kinds of cuts amount to little more than tinkering around the edges of a system that they see as fatally flawed. 

"You can't continue to nibble around the edges of this," Ms. Wohlgemuth said. "It's got to be a wholesale reform if we're actually going to be able to make a difference."  

Where's the Flexibility?

Dr. Holcomb and others say states must find a way to adapt their Medicaid programs to changing needs. He says states are "bound by the strictures" set out by the federal government as far back as the mid-1960s. 

"For a state to change its Medicaid plan it's got to submit a waiver request, and those waiver requests – if they're ever acted on – take years to get approved," Dr. Holcomb said. "So flexibility is a problem." 

For example, TMA supports requiring a copayment from Medicaid enrollees who go to hospital emergency departments for care they should have received in a physician's office. Experts believe that would discourage inappropriate use of emergency departments, where care generally is six to seven times more expensive than an office visit. Studies show that patients on Medicaid are far more likely to use the emergency department for nonemergency care. 

"What that does is sort of obvious," Dr. Holcomb said. "It makes patients stop and think about whether their situation is really an emergency or whether they can wait until they can see their own doctor. If carefully structured, there's no reason to assume that wouldn't work with the Medicaid population, but we're not allowed to do it. We don't have the flexibility within the structure of the Medicaid program as handed down by the feds to allow us to go to that kind of copay." 

Exploring the Options

Are any of the proposals to make radical changes in the Texas Medicaid program realistic options? Even before Governor Perry suggested dropping out of Medicaid, that notion was being debunked. 

In 2009, the legislature passed House Bill 497 by state Rep. John Zerwas, MD (R-Richmond), which directed HHSC and the Texas Department of Insurance (TDI) to study the potential impact on Texas if Medicaid was eliminated. Their report, issued in December 2010, found that Texas stood to lose $15 billion in federal Medicaid matching funds, while Texas taxpayers would continue to pay federal taxes to support other states' Medicaid programs. 

The report also said that 2.6 million Texas could become uninsured and that federal law would still require hospitals to treat medical emergencies of uninsured former Medicaid and CHIP clients, potentially adding billions to uncompensated care in the state. 

Finally, the agencies concluded the legislature could preserve benefits for some current Medicaid and CHIP clients by using the state's share of program funds, but that likely would shift significant costs onto county governments and public hospitals. 

Ms. Dunkelberg says opting out of Medicaid is not realistic. 

"States, obviously, can get out of Medicaid," she added. "It's an optional program. But the Health and Human Services Commission report does a fairly thorough job of laying out a lot of reasons why it would be fairly disastrous for us to try to do that in Texas," she continued. "It's about 15 percent of our health care budget in the state. It's paying for more than half of our deliveries, more than 70 percent of our nursing home residents, virtually all of our developmentally disabled and intellectually disabled population's health care, and almost anyone with a serious chronic illness or disability, not to mention 2.5 million children. And, we would also lose our CHIP block grant if we got out of Medicaid. That's 3 million Texas children who are getting coverage." 

The Medicaid block grant idea also is problematic, even though the HHSC-TDI report concluded that could be a part of ensuring a sustainable future for Medicaid in Texas. The report concluded that federal Medicaid policy must change so that states can assume greater responsibility over program costs. 

Specifically, HHSC and TDI say the federal government should:   

  • Introduce consolidated annual funding streams and give the state latitude to implement market-oriented reforms and greater client and provider accountability. 
  • Grant states additional flexibility to design Medicaid benefit packages that encourage individual decision making and improve health outcomes. 
  • Revise the formula used to allocated federal Medicaid dollars to increase Texas' federal match. The state has about 10 percent of the nation's population living below the federal poverty line and 13 percent of the nation's uninsured, yet receives less than 7 percent of federal Medicaid dollars.  
  • Waive state Medicaid maintenance of effort requirements under ACA. 
  • Pay 100 percent of Medicaid, CHIP, and uncompensated care for undocumented immigrants.  
  • Give states more flexibility to use cost sharing as a way to promote individual responsibility for personal health and wellness decisions.   

While the block grants seem to have some support in the legislature and among some interest groups, TMA and others say there are definite problems. 

"How do you adequately account for rapid caseload growth and medical inflation?" Dr. Holcomb asked. Unless some sort of adjuster was included to account for such cost growth, particularly in a state growing as rapidly as Texas, the state might "just have to eat" the additional funds needed to cover all eligible residents, he says. Then what? Would Texas make up the difference by drastically cutting physician and provider rates, coverage, or services? 

"Without a lot of serious consideration, we're not optimistic that a block grant is going to be the way that's going to lead us out of the Medicaid wilderness," Dr. Holcomb added. 

Besides, Ms. Dunkelberg says, there is no provision in Medicaid for true block grants. That, she says, would require major statutory change by Congress. 

Defining the Contribution

Perhaps the idea farthest outside the current Medicaid box is the one TPPF put forward in February. It called for shifting Medicaid from a defined benefit to a defined contribution program to provide subsidies so that Medicaid beneficiaries can purchase their own private health coverage. 

"We feel the state's role should be in determining the amount of subsidy that we need to provide to help people purchase their own insurance rather than decide for them what kind of insurance they need for their particular circumstance," Ms. Wohlgemuth said. 

She says the TPPF plan would provide some subsidies for all Texans living below 175 percent of poverty. The subsidies for the poorest Texans would be 100 percent, declining to just 10 percent for those at 175 percent of poverty, she says. 

The advantages to the TPPF plan, Ms. Wohlgemuth says, is that it would stop the "churning" of people constantly going on and off the Medicaid program as their income levels change. It also would solve the access problem created by the fact that only about 32 percent of the state's physicians currently accept Medicaid patients. She says virtually 100 percent of Texas doctors would be willing to see Medicaid patients because their coverage would be indistinguishable from other privately insured patients.

TMA officials say physicians would be ecstatic if Medicaid paid the same as privately insured patients, but add that if TPPF is concerned about rates, it should urge the legislature to increase rates under the current program. Ms. Davis says it has never done that.

The sticking point with the TPPF plan is how to create such a system without having to get a waiver from the U.S. Centers for Medicare & Medicaid Services (CMS). The first option would be to create an interstate compact with another state. 

"Interstate compacts have been around since the Articles of Confederation," Ms. Wohlgemuth said. "That's how we worked prior to our constitution." 

Under the TPPF idea, Texas and another state could adopt an interstate compact for Medicaid to allow them to retain their federal tax dollars that previously went to Medicaid, and then design their own Medicaid programs. Such a compact would go directly to Congress for approval rather than having to be authorized by CMS, Ms. Wohlgemuth says. 

A compact could be between only two states or all of the states, she adds.  

"That would free every state to design its own program. If Vermont wants to do a single-payer system, maybe it would work for their tiny population," she said. "It would not work in Texas, and we believe that the free market offers more choices and would put the decision making back with consumers for determining their own health care needs." 

While interstate compacts are common on issues not typically regulated by Congress, TMA officials question whether such a compact for Medicaid and CHIP would be legal since federal law mandates federal oversight of both programs.  

At press time, Rep. Lois Kolkhorst (R-Brenham) and Sen. Jane Nelson (R-Flower Mound) had filed bills to create the interstate compact, and Ms. Wohlgemuth says Representative Kolkhorst is looking at filing other elements of the TPPF plan. 

Representative Kolkhorst chairs the House Public Health Committee, while Senator Nelson chairs the Senate Health and Human Services Committee. 

"An issue as personal and sensitive as health care should be decided as close to home as possible," Representative Kolkhorst said. "Our nation is over $14 trillion in debt, so maybe it's time to give Texas a chance to take the lead on how to manage our public health programs. Medicaid is a state-federal partnership with the cost shifting more to the states, while at the same time the Medicare program is spiraling out of control. Texas needs to be in a better position to take care of the citizens who rely on these programs and provide certainty that we can afford them in the future."

Thirty-three states have proposed similar interstate compacts, and Ms. Wohlgemuth says such bills have already passed the Montana and Arizona senates. 

Smart Insurance Shoppers?

While the interstate compact idea seems to be gaining some traction, critics say it's unrealistic to expect Medicaid recipients to go out and shop for their own health coverage. 

"Given the incredible diversity of the folks in Texas Medicaid – everything from families with a long-standing connection to the workforce, working families that are living at very low incomes, to people with profound disabilities – the notion that you could dump all of those folks out into a private insurance market to purchase as individual consumers and do better is really questionable," Ms. Dunkelberg said. 

Dr. Holcomb says he's also "not impressed" that pushing the Medicaid population into the private marketplace would work. 

"This is an extremely diverse set of populations that fit into the Medicaid scheme," he said. "More than 85 percent of Medicaid patients earn less than poverty, and many have complex health care needs. How are they supposed to value shop for insurance coverage when I have to hire a broker and a couple of financial people to figure out how to get insurance for my own employees? The level of sophistication that's required to choose an insurance product is well beyond my capability and probably beyond that of most Medicaid recipients who are struggling in $8-an-hour jobs to get through the week." 

If Congress failed to approve the interstate compact, a more radical idea put forth by TPPF would push Medicaid enrollees into the state health insurance exchange required by ACA. Ms. Wohlgemuth says a loophole in that law potentially could require the federal government to pick up 100 percent of the cost of coverage for those enrollees, although other experts say it is not clear that ACA obligates the federal government to cover the cost of coverage of those below 133 percent of poverty who go into the exchange. 

And even Ms. Wohlgemuth acknowledges that likely would prompt a federal lawsuit. 

Quality-Based Payments

While not as radical a departure from traditional Medicaid as the TPPF plan, legislation filed by Senator Nelson and backed by Lt. Gov. David Dewhurst would revamp how care is delivered and paid for in Medicaid. 

Senate Bill 7 would move from a fee-for-service-based payment system toward quality-based payments in Medicaid. Senate Bill 8, which would apply to both Medicaid and the private insurance market, would allow creation of health care collaborative, similar to accountable care organizations, to take on risk for providing care for certain populations of patients. 

Under SB 7, a new quality-based payment advisory committee would establish outcomes and performance measures that physicians, hospitals, and Medicaid and CHIP plans would have to meet. At least some part of provider and health plan payments would be tied to meeting those measures. 

"There are substantial cost savings to be achieved by reducing hospital infections, unnecessary tests and procedures, and preventable adverse events," Senator Nelson said. "By some estimates, one-third of all health care costs result from waste such as administrative inefficiency, unnecessary treatment, and medical errors. These savings will add up over time as quality and efficiency improves." 

A spokesperson for Senator Nelson says that estimate came from Robert Kelley, vice president for health care analytics at Thomson Reuters, a business information company. 

She also says SB 8 would give providers flexibility to work together to improve quality and reduce costs. "It does so by removing regulatory barriers so physicians and other providers can collaborate to achieve the best outcomes for their patients." 

While not necessarily opposed to all of the concepts contained in SB 7 and SB 8, TMA has raised a number of concerns about them, including how the proposed quality-based payments might mesh with the proposed expansion of Medicaid managed care statewide, as well as language that would jeopardize the current ban against hospitals and other nonphysician organizations directly employing doctors. 

Political observers, however, say both measures are likely to undergo substantial change through the legislative process. 

The Bigger Picture

Whether any serious reform of Medicaid can pass this session is still unclear. And some political observers say it's much more likely that lawmakers will simply cut Medicaid spending and tinker with efficiencies that might allow them to solve the budget crisis. 

But Ms. Dunkelberg and others say lawmakers should look at the bigger picture – that Medicaid spending is just part of a larger crisis in total health care spending in Texas and the nation. The cost of Medicaid is undoubtedly rising, but not any faster than Medicare or private insurance costs. In fact, the real rate of Medicaid growth has been slower than other payers, she says. 

"If all you have to pay for is part of the Medicaid program, it's natural that the legislature would have that focus," Ms. Dunkelberg said. "But the bulk of the opinion among serious health care economists and serious federal budget experts is that we have to get all of our health care spending under control so that it comes down as a percentage of GDP [gross domestic product], so it's not growing at 2.5 times the rate of general inflation. And Medicaid is not driving that. The entire system is." 

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail.


Senate Committee Backs Restoring Medicaid Fees

The Texas Senate Finance Committee in April voted to eliminate the proposed 10-percent cut in physicians' Medicaid and Children's Health Insurance Program (CHIP) payments, to maintain the current level of community mental health services, and to fund tobacco cessation programs.

At press time, the proposed budget the Senate was working on made fewer drastic cuts in the budget than the one the House of Representatives approved on April 3. The house finalized a proposed 2012-13 budget with deep cuts in education, health, and human services programs.

"The House of Representatives must take steps to ensure Texas can maintain its ability to care for our most vulnerable patients – children, seniors, and people with disabilities and mental illnesses," TMA President Susan Rudd Bailey, MD, said in a press statement before the budget debate began. "If lawmakers choose to shut the door on these patients' ability to obtain cost-effective care, local taxpayers will be stuck picking up the cost but at a much higher price."

Earlier, in March, Sen. Jane Nelson (R-Lewisville), chair of the Senate Finance Subcommittee for Medicaid, asked Tom Suehs, executive commissioner of the Health and Human Services Commission, to develop a list of top funding priorities. Leading Commissioner Suehs' recommendations was a proposal to restore 7 percent of the proposed 10-percent cut in physician payments for both Medicaid and CHIP.

Senator Nelson's subcommittee designated that recommendation as a top-level priority, along with proposals to:  

  • Stop paying coinsurance for patients covered by both Medicaid and Medicare if the coinsurance would exceed the Medicaid rate; 
  • Restore 5 percent of the proposed 10-percent cut to hospitals and other providers; 
  • Reduce funding for labs and durable medical equipment providers by 20 percent, with the goal of mitigating those cuts by half if funds become available; 
  • Approve continuation of the Women's Health Program, pending passage of legislation to extend program beyond 2011; and 
  • Fund Medicaid caseload growth. 

Updates on the budget deliberations and how they affect physicians and patients will be published in the May 1 and 15 issues of Action, TMA's newsletter, and on the TMA website. The August issue of Texas Medicine will have a complete wrap-up of the legislature's actions on health issues.


  Texas Medicaid: Perception vs. Reality

 Texas Medicaid gets a bad rap. Medicaid critics perpetuate false information about the program. Most people don't know who is covered by Medicaid or how state dollars are spent. Many Texans believe that Medicaid covers only pregnant women, shiftless men, and illegal immigrants; that welfare moms and their kids siphon off dollars from the system; or that most adult Medicaid enrollees are healthy, able-bodied Texans who can afford to pay for private health insurance.  

Texas Medicaid is misunderstood. TMA wants to set the record straight.  

What does Medicaid pay for?  

Perception: Welfare moms and their kids siphon off money from the system. That's where all the Medicaid dollars go. 

Reality: False. Low-income elderly patients and Texans with disabilities account for most Medicaid spending. Medicaid pays for 70 percent of all nursing home care in Texas. Medicaid also pays for services that help seniors and patients with disabilities stay in their homes. For low-income seniors, Medicaid fills in gaps in Medicare coverage, such as vision care, and pays Medicare copayments and deductibles. While the elderly and patients with disabilities cost the most, they account for only 23 percent of the Medicaid population. However, as baby boomers come of age, this population is going to increase dramatically as will the cost of their care.  

Perception: Undocumented immigrants are a huge drain on Medicaid. 

Reality: False. Undocumented immigrants cannot enroll in Medicaid. To apply, patients must present proof of citizenship. Medicaid does provide emergency services for legal and undocumented immigrants. In 2009, Texas Medicaid spent approximately $309 million (state and federal funds) on health care for noncitizens, or about 2 percent of Medicaid's costs. Children's Health Insurance Program (CHIP) perinatal coverage provides some basic prenatal care to noncitizens to ensure healthy babies are delivered. In 2009, the CHIP perinatal program spent $188 million on immigrants (state and federal funds). 

Perception: The state offers Medicaid patients too many benefits.  

Reality: False. Medicaid benefits reflect the diversity of patients covered by the program. Texas Medicaid covers everyone from newborns to elderly patients living in nursing homes with complex medical conditions. Many Medicaid patients are uninsurable in the private sector because of their medical conditions or illnesses. Federal law requires states to cover these services:   

  • Inpatient/outpatient hospital; 
  • Physician services; 
  • Lab and x-ray; 
  • Well-baby/well-child checkups, known as the Early and Periodic Screening, Diagnosis, and Treatment Services/Texas Health Steps, for children younger than 21;  
  • Home health care; 
  • Rural health clinics/federally qualified health centers; and 
  • Nursing facilities. 

  Optional services: While these services are not required in Medicaid, they all are critical to maintaining good health. When the state covers these services, it also helps direct patients to the most cost-effective setting to receive care, their medical home:   

  • Prescription coverage (all states cover prescriptions; however, for adult patients, states may set a limit on the number of prescriptions it covers); 
  • Hospice; 
  • Private-duty nursing; 
  • Durable medical equipment; 
  • Podiatry; 
  • Eyewear; 
  • Hearing aids; 
  • Mental health counseling;  
  • Ambulance; and 
  • Intermediate care facilities for people with mental retardation or developmental disabilities.  

Who is eligible for Texas Medicaid?  

Perception: Adult Medicaid patients are predominantly "welfare queens" or homeless men.  

Reality: False. Simply being poor does not qualify a Texan for Medicaid. Only about 6 percent of working-age adults qualify for the program. Two percent of adults on Medicaid receive welfare, known in Texas as the Temporary Assistance for Needy Families program. Of the children on Medicaid, the majority have at least one parent who works.  

Perception: Pregnant women dominate Medicaid enrollment. 

Reality: False. Pregnant women make up about 4 percent (105,991) of Medicaid enrollment. Two months after giving birth, women lose regular Medicaid unless they live in extreme poverty, earning less than about $3,700 a year. Medicaid pays for about 56 percent of all births. 

Who pays for Medicaid?

Perception: Most Medicaid patients could purchase their own insurance. 

Reality: False. The majority of Medicaid enrollees live in families earning at or below the federal poverty level, or $22,350 for a family of four. Only about 14 percent of Texans at this income level have access to employer-based coverage. Of those who do, data from the Texas Department of Insurance indicate the average amount employees must contribute is $4,000, excluding copays and deductibles. For poor and low-income families, employer-based coverage is simply cost prohibitive.  

Perception: Texans are stuck with the entire price tag for Medicaid and CHIP. 

Reality: False. Texas Medicaid receives a generous federal match, bringing Texans' hard-earned tax dollars back home. The current federal match for Medicaid is about 60 percent (extra federal funds for the past two years increased it to 68 percent). The federal matching rate for CHIP is even more generous. The federal government pays 72 percent. Texas pays the balance. Cutting Medicaid means Texas' taxpayers pick up the entire expense, instead of only 40 percent for Medicaid and 28 percent for CHIP. According to the Legislative Budget Board, Medicaid is the largest source of federal funding in the state. In 2009, Medicaid brought $28.7 billion in federal dollars back to Texas. 

Sources: Medicaid Point-in-Time Enrollment (Health and Human Services Commission), January 2011. Impact on Texas if Medicaid Is Eliminated (Health and Human Services Commission and Texas Department of Insurance), December 2010.  

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