2001 Legislative Compendium: Health Care Funding

Medicaid Provider Rate Updates  | Medicaid Coverage | Children's Health | Public Health | Prescription Drug Coverage | Nursing Shortage Relief | Long-Term Care Quality | Teacher Health Insurance

Early legislative forecasts predicted that the state's tight budget would derail substantial health care reform. However, prognosticators proved wrong. Vigorous advocacy by TMA and other health care providers, combined with skillful negotiations and budget writing finesse by the Senate Finance and House Appropriations committees, resulted in the legislature dedicating $34.9 billion (state and federal funds) to health and human services, a 17-percent increase from the previous session. The lion's share of these monies - approximately 72 percent - will be dedicated to Medicaid. The Medicaid dollars will pay not only for caseload growth and costs associated with medical inflation, but also TMA-backed Medicaid rate increases for physicians, hospitals, and long-term care facilities and simplification of the enrollment and eligibility process for children's Medicaid.

In addition to substantial Medicaid funding, the legislature provided dollars for many other less visible, but equally important, health-related measures TMA supported, such as new monies for immunizations, telemedicine, low-income students entering medical school, and numerous public health measures.

Lastly, health care coverage for teachers also received substantial funding - $1.8 billion over the next two years. 

Below are highlights of the 2002-03 health care budget; items are organized by issue area. Unless otherwise indicated, dollar amounts refer to state funding only.


  • $197 million to update Medicaid rates for physicians, hospitals, and other health care providers. (See below for details.)
  • $190 million to increase funding for nursing home and hospice care.
  • $104 million to reduce waiting lists for community based services.


$3.4 million (state and federal funds) to expand the use and availability of telemedicine within Medicaid. The monies will implement a TMA-backed bill, SB 789. For a complete description of the bill, go to the "Medicaid - Telemedicine" section below. Additionally, the Texas Department of Health received $212,000 to fund telemedicine pilot projects aimed at expanding prenatal care and other services to low-income women. One pilot must be located in an urban area and the other in a rural community.

Breast and Cervical Cancer Coverage
$3.6 million (state and federal funds) to implement SB 532, extending Medicaid coverage to women diagnosed with breast or cervical cancer. Currently, low-income, uninsured women are eligible to participate in the National Breast and Cervical Cancer Early Detection Program. However, if a woman is diagnosed with cancer, monies are not available for treatment. Enactment and funding of SB 532 will allow Texas to extend Medicaid coverage to these women, benefiting about 200 women each year. The federal government pays three-fourths of the new program's costs.

Coverage for Psychotropic Medications and HIV/AIDS
SB 1 included several riders directing the Health and Human Services Commission (HHSC) to pursue federal waivers that would bring additional federal dollars to Texas to expand Medicaid services to designated populations. HHSC is directed within SB 1 to specifically pursue waivers allowing the state to establish prescription drug and related medical service coverage pilots for patients with behavioral health disorders and HIV/AIDS. 

On June 17, Gov. Rick Perry vetoed the statutory component of these riders, SB 1156. (See below for details.) However, pursuit of the waivers is not necessarily contingent upon legislation. Thus, HHSC has the authority to initiate waivers to implement these riders.


$122.6 million to simplify the enrollment and eligibility process for children's Medicaid.

$263 million to continue funding for the Children's Health Insurance Program (CHIP) plus $65 million to pay for caseload growth and provider rate increases.  The state expects to enroll nearly 500,000 children in the program by the end of 2003.

$437,000 to study extending Medicaid and CHIP coverage to children of Texas' migrant and seasonal agricultural workers.  If the study indicates that extension of coverage is cost-effective, the state may develop a pilot health care coverage program for this population.


$800,000 to fund hepatitis A vaccinations for preschoolers and adolescents living in counties with high incidences of the disease, including Dallas, Harris (Houston), and numerous border counties.

$300,000 to fund SB 55, which establishes a statewide education program to prevent infant mortality.


$35 million to implement a prescription drug benefit plan for low-income senior citizens and to establish a bulk-purchasing program for prescription drugs offered through Texas' public health care programs, including Medicaid, employee and teacher retirement systems, and prison health care.


$1.44 million to provide additional funding for registered nurse educational programs. The monies will allow nursing programs to hire more faculty and secure more classroom and training space to accommodate more students.


In response to physicians' and patients' concerns about health care quality within nursing homes, the legislature allocated $180,000 in state funds to survey nursing facility residents about their quality of care and quality of life. Another $500,000 was allocated to perform on-site case reviews of nursing home residents' care. The survey and on-site reviews will be conducted by the Department of Human Services, which is required to report its findings to the legislature by January 2003.


To fund health care coverage for teachers, the legislature allocated $1.8 billion over the biennium. Funding begins in the second half of the biennium, starting in September 2002.

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