Cutting Deep
Imagine having to choose between paying your electric bill and taking your sick daughter to the doctor. That’s the kind of dilemma facing working-class families these days in Texas, where the state budget has been balanced on the backs of more than 150,000 kids who’ve been thrown off the health insurance rolls. Here’s what happens when the Legislature and the governor start cutting deep.
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But by the start of the last legislative session, in January 2003, the fortunes of CHIP had already turned. A statewide economic slowdown had left the Legislature facing a $10 billion budget shortfall, the largest in Texas history. Republicans, whose calls for smaller government had long met with resistance from the Democratic majority, had control of both the House and the Senate for the first time in 130 years. Despite the record shortfall, Republican leaders declared at the outset of the session that they would balance the budget while making good on their campaign promises not to raise taxes. To do so, Governor Perry and House Speaker Tom Craddick advocated lowering the state’s spending levels rather than using non-tax revenue to fund programs like CHIP, as recommended by a fellow Republican, Lieutenant Governor David Dewhurst. The opposition was powerless to fight the cuts. “The Democrats had no political capital by the start of the session,” said Harvey Kronberg, the editor of the Quorum Report. “In the House, they didn’t win a single significant battle. The House functioned almost as an adjunct to the governor’s office. Perry and Craddick made it clear that they weren’t interested in coalition-building but in break-your-knees partisanship.”
With the backing of party leaders eager to reduce state spending, Representative Arlene Wohlgemuth, a Republican from the Fort Worth suburb of Burleson, introduced legislation in March 2003 to overhaul the state’s health-and-human-services agencies and programs like CHIP, at a projected savings of $1 billion. A proponent of low taxes, Wohlgemuth has long been a champion of limited government; she told the Waco Tribune-Herald this summer that she considered CHIP to be little more than “a socialized medical program.” The bill reflected this vision. In the final version, dental and vision benefits were eliminated. Mental health benefits were curtailed so severely that the federal government later asked the state to justify the cutbacks. (In October 2003 the state restored some of these benefits.) A three-month waiting period for new enrollees was instituted. An asset test was established for families with incomes higher than 150 percent of the federal poverty level; a family with more than $5,000 in cash and savings was ineligible. The switch from yearly to monthly premiums was introduced. An amendment proposed by Democrats calling for a $1 tax on a pack of cigarettes, which would have raised an estimated $1.5 billion and made cuts to CHIP and other programs unnecessary, failed.
Once the Republicans had decided to hold the line on taxes and other revenue-raising proposals, cuts to CHIP were inevitable. The program wasn’t alone in getting the ax—public schools and state universities felt the pain too—but the CHIP cuts were rooted not only in the desire to curb state spending but also in many Republicans’ philosophical belief that some of the program’s recipients were not truly needy. Then-Republican party chairwoman Susan Weddington, of San Antonio, remarked in a conference call with Republican leaders that parents whose children might be dropped from CHIP would have to buy their kids private health insurance and “maybe have a little less disposable income or a little less inheritance from Mom and Dad.” Talmadge Heflin, the House Appropriations Committee chairman, told his hometown newspaper, the Houston Chronicle, that many children who might lose their CHIP benefits could probably be covered under their parents’ employer health plans but that it had been “a choice of the parents not to purchase the insurance.” To Democrats like state representative Garnet Coleman, who had helped shepherd CHIP legislation to passage in 1999, the argument that the program’s recipients were gaming the system was both ignorant and unfounded. “The conservative right has made this argument for years against welfare, and now they want to make it apply to CHIP,” Coleman said this fall from his office inside the Capitol. “It’s the old idea of the welfare queen who’s driving a Cadillac, and it’s a bogus argument. These aren’t deadbeats. These are folks who have jobs, who are doing everything they can to take care of their families, and who are still one paycheck from poverty. They don’t need to be lectured about personal responsibility.”
Since the CHIP cuts took effect last September, critics of Republican leaders have begun to make hay out of the image of children cast aside by a heartless Legislature. Both U.S. senator Kay Bailey Hutchison and state comptroller Strayhorn, who are considering challenging Perry in the next Republican primary, have been outspoken in their criticism of the governor. They denounce his refusal to tap into the $98 million that (with the help of matching federal dollars) would restore CHIP funding for 2005. Strayhorn has been particularly critical, upbraiding the governor for holding four special sessions in the past eighteen months in which he refused to take up the issue, while focusing instead on matters like redistricting. “There is no excuse for not having restored full funding to CHIP a year ago, much less now,” Strayhorn said in October, in her well-appointed office that sits blocks from the Governor’s Mansion. “I identified $703 million that was available as of July 2003. By the time we had a fourth special session, I had identified $1.2 billion that was available. So for four consecutive special sessions the dollars have been there, and the Legislature was in Austin, but the governor would not even add it to the call so that our representatives could vote on the issue. That, in my book, is unconscionable.” Governor Perry declined to be interviewed for this article, but his spokesperson Kathy Walt dismissed Strayhorn’s criticisms. “Suggestions that Texas spend every dollar as soon as it comes in is like spending your paycheck as soon as you get it and ignoring the bills that come in later,” she said.
This fall, Wohlgemuth found herself in an unexpectedly tight race for Congress against Democrat Chet Edwards, of Waco, who spared no opportunity during their six debates and months on the campaign trail to attack her record on CHIP as evidence of hard-heartedness. “She didn’t cut overhead,” Edwards was fond of saying on the stump. “She cut kids.” Perry, perhaps sensing his own vulnerability on the issue (or, as political observers in Austin whispered, in a last-ditch effort to save Wohlgemuth from defeat), did away with CHIP’s mandatory monthly premiums two weeks before the November election. Wohlgemuth, who declined to be interviewed for this story, lost by four percentage points, a remarkable margin considering that fellow Republicans redrew the district last year to all but guarantee a victory for a conservative candidate and that she had the support of President Bush, whose Crawford ranch is located within the district. Edwards’s attack ads—which had endlessly replayed her declaration, “CHIP has never been one of my top priorities,” alongside photographs of a three-year-old girl who had been dropped from the program—had their intended effect. As Republicans swept up office after office on Election Day, the architect of the dismantling of CHIP was suddenly left without a constituency.
WHETHER THE LEGISLATURE chooses to revisit the issue of CHIP during the upcoming session will depend on the will of Governor Perry and the Republican majority in the Legislature. CHIP must compete for funding with school finance—a far more important issue to Perry’s chances for reelection, and to most Texans generally, than children’s health insurance. The Texas Public Policy Foundation, a conservative think tank based in Austin, has urged the governor to stand firm in his commitment to smaller government. The TPPF argues that the answer to the problem of the uninsured is not more government spending but lower health care costs. It has a point—who doesn’t want to lower the cost of health care?—but the solution the TPPF proposes is to set up medical savings accounts so that people can purchase insurance on the free market, which would in theory cause the price of premiums to decrease for everyone. However, only in a perfect world would families like the Garcias and the Botellos be able to afford private insurance for their children. In the meantime, there are imperfect answers like CHIP, in which the federal government provides 72 cents for every 28 that the state spends. And CHIP does its part to lower health care costs by moving treatment from emergency rooms to doctor’s offices. “Even if you don’t care about uninsured children for all the reasons you ought to, you should care because this is costing you in the end,” Comptroller Strayhorn said. “When we abdicate our responsibilities at the state level, we’re causing these expenses to be picked up by local property owners at at least three times the cost.”
There is another, harder-to-quantify cost to the CHIP cuts: the lost value of what policymakers often refer to as “human capital.” The uninsured children who fill hospital emergency rooms today are the state’s workforce of tomorrow. The Legislature understood how an investment in the present could pay dividends down the road when it opted in 2003 to give $295 million to Governor Perry’s Texas Enterprise Fund, state dollars which can be offered as incentives to businesses to stay in, or relocate to, Texas. If the fund brings much-needed business to the state and provides a boost to the economy, it will be money well spent. But the Legislature has not regarded healthy children as an equally urgent investment.
Instead, its cuts left 159,114 kids without health insurance. One such child is an Austin seventh-grader named Roy Martinez. His mother, Michelle, learned in May from a perfunctory letter sent by the Health and Human Services Commission that her annual income level was $33 over the CHIP limit. A single mom who works in a cardiologist’s office, Michelle had never had difficulty qualifying for the program before, but under the new law, she is no longer permitted to deduct the cost of child care for her three-year-old daughter when calculating her monthly income. (While her daughter receives health insurance through her ex-husband, Roy has a different father.) To add Roy to her health plan at work would cost $343 a month, an expense Michelle cannot afford. When her son lost his glasses this summer, she tried to come up with enough money to replace them, but by the start of the school year, Roy was sitting in the front row, straining to see the blackboard. “I deal with people all day long at work who don’t have insurance, but you can’t understand what it is like until you experience it firsthand,” Michelle said. “You feel like a failure as a parent. You try so hard to make sure that your kids have everything they need, and then when you can’t, you lie awake at night wondering where you went wrong.”
The most elemental rule of medicine is “First, do no harm.” The standard should be no lower for the State of Texas.
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