Step 2 to a New Healthy Texas: Maximize and Streamline Funds


As pragmatic Texans, a central component of our debate about the Affordable Care Act’s Medicaid expansion to low-income adults is the financial aspect.  Would Texas benefit from the additional federal funds for the expansion population or will the newly insured simply be a greater drain on the state budget?

To answer this question, let’s take a look at what funding we are currently putting into healthcare for low-income, uninsured adults.  Obviously, these folks are able to access healthcare somewhere, somehow; when the medical need is dire enough, very few people, even the uninsured, would refuse to seek care.  So where are they getting that care, and who is paying for it?

I’ve begun a list of current spending on healthcare for people who would be covered if Texas chooses to participate in the Medicaid expansion:

Governmental Funds:

  • County property taxes for indigent care programs (up to 8% of county budget)
  • State supplemental funds for counties exceeding 8%
  • Local property taxes for hospital districts ($500 million in Harris County)
  • Local property taxes for local mental health mental retardation authorities (LMHMRAs)
  • State funds for LMHMRAs
  • State mental health hospitals and other state mental health and substance abuse programs
  • State funds for the Women’s Health Program
  • Local and state dollars for mental health care provided in the criminal justice system
  • Supplemental  payments (disproportionate share and uncompensated care payments) to hospitals via State and Federal Medicaid funds and/or inter-governmental transfers from local governments
  • Specified federal grants (for kidney disease, HIV/AIDS, family planning, etc.)

Private Funds:

  • Community benefit dollars and written-off, uncompensated care expended by non-profit hospitals for care to the low-income uninsured
  • Higher charges from hospitals to commercial insurers and self-funded employers to cover the cost of uncompensated care in ERs
  • Charitable/philanthropic dollars to charity clinics, Federally Qualified Health Centers, and hospitals
  • In-kind donations/pro bono services by many physicians

Keep in mind that this list is only a first attempt at detailing all the funding sources; it is not exhaustive.  Even so, notice how fragmented the system is—not just in funding, but in care coordination as well.  Whether or not we choose to move forward with the Medicaid expansion, we need to streamline funding, just as we need to defragment our healthcare system and encourage higher quality, coordinated care.

But the bigger picture is that, combined, the sources I have listed spend billions of dollars on healthcare each year.  By leveraging federal funds available through the Affordable Care Act, we would be able to decrease the strain on private, local, and state budgets while providing healthcare to more people.  For the expansion population, the federal government will cover 100% of costs from 2014-2016, after which federal funding will gradually decrease to a low of 90% in 2020 and beyond.  The new federal dollars would allow us to choose either to reduce local taxes or redirect those funds toward expanding access or other local goals.


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