Devouring 19 percent of the state’s annual budget and growing at a rate of 9 percent each year, the cost of Medicaid is rapidly becoming unsustainable in Texas. According to a report released in December 2010 by the Texas Department of Insurance, 24 percent of Texans receive publicly funded care, and just over half of that group is on Medicaid.
State costs have skyrocketed over the past two years as federal matching funds rose to meet the needs of larger enrollments that accompanied the economic downturn. Now, in the face of a $27 billion shortfall, Texas legislators must make some tough budget cuts.
GOP leaders have proposed curtailing Medicaid costs by 29 percent, a task that has proven to be even more difficult than it first seemed.
The trouble with cutting select medical services is that the decisions that save money in the short term can lead to much greater costs down the road. A person who is unable to get kidney dialysis, for example, may ultimately need extended hospital treatment. Likewise, cutting costly hospice services now means that more people will need hospital care at the end of their lives. All of these emergency treatments can result in larger Medicaid bills.
A possible solution
As legislators battle over these decisions, an Austin think tank has put forth a new idea: scrapping the Medicaid system entirely. In a proposal unveiled on Feb. 24, the Texas Public Policy Foundation suggested a replacement plan called TexHealth, a defined contribution program that, the foundation says, will expand care and lower costs.
“By switching to a premium subsidy, TexHealth will provide better access to health care services and be available to potentially 4 million more individuals than currently served,” TPPF Executive Director Arlene Wohlgemuth said. “Not only can TexHealth provide better health care, but we can do it at a lower cost to taxpayers.”