Putting House and Senate Budget Cuts in Perspective
Eva DeLuna Castro’s Comparison of the Texas Senate and House Budgets includes some of the high-level concerns about the major gaps in both chambers’ Medicaid-Children’s Health Insurance Program (CHIP) proposals. This post and a new linked detailed table provides more details on Medicaid-CHIP, with special focus on Texans with disabilities and on children. But before we dive in, let’s look back at how funding has failed to meet 2017 needs. Let’s look at the impacts of tax breaks, revenue diversions and the talk in Congress of capping Medicaid funds for states. All these factors play into the real state of Texas Medicaid and its ability to continue to serve over 4 million Texans.
Both House and Senate Budget Bills Risk Cuts As Bad as 2003, 2011
And New State Revenue Cuts, Federal Medicaid Cap Proposals Could Force More Cuts in Eligibility, Benefits, and Provider Pay
REVENUE MATTERS. At some point Texas legislators will pass a balanced budget, but decisions they made in 2013 and 2015 to give tax breaks and divert revenue resulted in having $10 billion less to work with for the 2018-2019 budget. This shortage is independent of any lower revenues Texas has because of lower oil and gas prices. In addition to coming into this 2017 session without enough money, the Legislature is looking to pass another huge tax break – even considering eliminating Texas’ main business tax completely – which could send us into our 2019 session another $3.5 billion in the hole.
CONGRESS CONTEMPLATING REDUCING FEDERAL MEDICAID DOLLARS, TOO. All versions of the recent Obamacare Repeal bills have proposed reducing Congress’ federal funding to states for Medicaid. Therefore we cannot count on federal funds to prevent Medicaid cuts if our own state budget comes up short.
Current Medicaid Proposals Compare in Scope to Cuts in 2003, 2011:
We calculated total reductions for earlier budget periods and compared them to the actual “client-service spending” that the state of Texas reported to federal Medicaid authorities for those years (i.e., does not include administration costs or special supplemental payments). For 2018-2019, we used Texas HHSC’s current Medicaid projection for 2018 and inflated that amount by the recent average annual growth rate to model 2019.
2003: Sweeping Medicaid and CHIP cuts originally passed at nearly $1 billion of General Revenue (GR). Then Congress made recession-related relief dollars available, and the Legislative Budget Board (LBB) reduced cuts to 10.4 percent of client services.
2011: The Legislature passed direct cuts to Medicaid that were 10.5 percent of the actual client service spending for 2012-2013, a comparable percentage to 2003. In addition, the Legislature left roughly $4.5 billion GR as an explicit “IOU” for Medicaid, to be funded in the 2013 session supplemental bill. This IOU left Medicaid four to five months short of covering the full 24 months in the biennium, and the Legislature passed a supplemental appropriations bill early in the 2013 session to prevent default on payments for health care and long-term care. The 2011 rate and benefit cuts largely remained, however.
2017: As the small chart above and the detailed table below describe in detail, the House and Senate appropriations bills include a mixture of potential cuts and IOUs for Medicaid. Should all of the under-funding of Medicaid be achieved through program cuts—that is, if the 2019 Legislature cannot or will not fund the supplemental needs—then the total tally would be about 13 percent of projected Medicaid direct client services for 2018-2019. Because of this, the Legislature’s intentions and its ability to find revenue in 2019 are of paramount importance.
Remember: Texas Can’t Kick Medicaid Can down the Road, unless there will be Revenue Available down the Road.
To assess the threat to ongoing Texas Medicaid services for over 4 million Texas children, seniors, people with disabilities, and pregnant women, it is important to watch the House and Senate budget bills closely. But we also have to watch how the chambers have handled the current 2017 Medicaid funding shortfall, actions they’re taking with respect to using available dollars, and making sure adequate dollars will be available in the future.
- The Texas Senate has not yet passed a supplemental appropriations bill to fill the current Texas Medicaid shortfall for 2017 (and other key state budget needs for 2017). The House did pass its supplemental bill, which included $930 million state dollars for Medicaid in 2017.
- The House approved use of some funding from the Rainy Day Fund, and the Senate has not (the RDF is projected to have $12 billion available by the end of 2019).
- The House has included text expressing its intention not to make Medicaid program cuts in association with its “federal flexibility” rider that pulls $1 billion state GR dollars from Medicaid. However, other House Medicaid funding reductions do not come with those reassurances. The Senate has remained silent about its intentions.
Now, be sure to read our policy brief for some of our top concerns on the House and Senate budget proposals being considered by the state budget conferees.