More on the Medicaid projections
Patti Hart’s post is exactly right. Dewhurst and the Senate are manufacturing a budget crisis that does not exist. (Well, that’s not the way Patti would put it, but she’s still stuck with the old-fashioned notions of objective journalism, which I find get in the way of blogging.) Some very quick points:
1. Medicaid caseload assumptions are part of the budgeting process. House and Senate budget writers get updated estimates at the beginning of the process, at markup, and in conference committee. Typically, there are three scenarios (low, middle, high). Conferees traditionally go with the low estimate. This creates a hole in the Medicaid budget, or, if you prefer, a structural deficit.
2. Using the low estimate allows budget writers to put some money aside to meet other spending priorities. Because Texas is on a two-year budget cycle, the hole typically is filled by a supplemental, or emergency, appropriations bill in the next legislative session. This amounts to cash-flow management, though I confess that the term “smoke and mirrors” is occasionally applied.
3. House members who have served on previous conference committees say that this is the first time in memory anyone has talked about funding Medicaid caseloads at 100%.
4. Patti is right on the money when she writes, “Senate leaders are choosing to lock up as much money as possible in paying for entitlements. The practical effect is this will make funding of discretionary programs more difficult.” One can speculate about why the Senate is doing this. Perhaps they want to be able to blame Medicaid caseloads for their failure to fund other areas of the budget. Perhaps they are worried about having to spend money in 2011. Perhaps Dewhurst wanted to take credit for solving a crisis. But it is a created crisis. If there is a supplemental appropriations bill, the same amount will have been spent on Medicaid whether the caseload is funded at 100% or at a lesser amount followed by a sufficient supplemental appropriation.
5. The Medicaid caseload flap is shaping up to be a major point of contention between the House and the Senate. But the Senate cannot impose the high estimate without the House’s assent. This is shaping up to be a major point of contention. The House’s position is that the conference committee should put off a decision on the caseload estimate until late in the negotiations. The Senate wants to press the issue now. It looks like posturing to me.
Peggy Venable says:
Lt. Gov. Dewhurst has consistently been cautious about spending. Last session, he wisely fought to keep more of the rainy day/budget stabilization funds anticipating they would be needed this session. Who could have anticipated we would get $16 billion federal stimulus funds? Considering we did get that influx of funding, it is appropriate that the leg attempt to fully fund medicaid. As Texas — and entitlement program numbers — grow, we should not put off fully funding the program when we have the additional cash to fund it now. Let’s hope the feds don’t continue to spend our children’s future with stimulus funding and bailouts. It’s a recipe for disaster.
Reply »
paulburka Reply:
May 7th, 2009 at 10:14 am
I agree with Peggy’s concluding sentences, but otherwise there is no reason why fully funding Medicaid is superior to previous practice. It limits your funding options.
Reply »
Spiro Eagleton says:
I’m just glad that you admit on this blog that you are no longer an objective journalist. I think its refreshing when people can be honest about where they are coming from, unlike virtually every other member of the news media that likes to pretend that they are objective and unbiased. The Fox News and Keith Olbermannization of America’s news media has just begun. Welcome to the club!
Reply »
Anonymous says:
yes, lets spend our children’s future invading countries with large oil reserves. That’s deficit spending I can agree with!
Reply »
Anonymous says:
Spiro Dickhead-
If anything, Burka’s bia would positively skew toward Republicans, not Democrats. I think he is still scarred from witnessing so much corruption while working for Babe Swartz.
Reply »
Spiro Eagleton Reply:
May 7th, 2009 at 1:33 pm
I don’t care who is skews towards. No one is unbiased in life despite what many in the media claim. I’m glad to see that Burka is being honest and upfront about it.
Also, what do you have against Tom Eagleton? I didn’t think profanity was allowed on this site.
Reply »
paulburka says:
It’s “Schwartz.”
Reply »
David Siegel says:
If this is a manufactured crisis, then why is Dewhurst so eager to tap the Rainy Day Fund? I thought maintaining the RDF was going to be one of his big talking points in his next campaign.
P.S. How long can they get away with blaming underperformance by the margins tax for the “structural deficit” caused by the 06 property tax cuts? The fiscal notes at the time showed they were creating a giant hole. It was just wishful thinking that Strayhorn was manipulating the numbers or that the supply-side voodoo of tax cuts leading to increased revenue would rescue them. They walked into this “deficit” with their eyes wide open. Don’t Republicans preach that people should take responsibility for their own actions?
Reply »
Ben Quick says:
don’t let facts get in the way
Reply »
Anonymous says:
You can only “short” Medicaid to a degree, considering the timing of when HHSC receives the supplemental payment, otherwise they flat out run out of cash.
It’s my understanding that fully funding this extra $1 billion, would not be fully funding Medicaid, just increased amount from the update. The rest is just a budgetary decision of how much between bare bones, and fully funding, is the right level.
Reply »
Rog says:
I hate to keep repeating myself, but why isn’t the Republican leadership promising to cut taxes to pay for the budget shortfall?
If that is the Republican mantra, that cutting taxes always increases revenue, this is a perfect test case to put up or shut.
Reply »
Anonymous Reply:
May 7th, 2009 at 2:24 pm
it is all about the assumptions used to score the revenue. Though I get your smart ass point. I am sure you will be labeled a pragmatist, and us supply-siders ideologues.
Reply »
Anonymous says:
HHSC’s numbers (the HIGH scenario) are low compared to trailing 12-month experience across not just medicaid, but other entitlement programs. Most folks agree that recessions hit Texas later, and that Texas subsequently comes out of recessions later.
This observer thinks that HHSC’s (HIGH) projections being low compared to their trailing 12-month average means that even the high projections are low.
I’d say the Senate is putting itself in a much better position by going with the high numbers.
Reply »
Anonymous 2 says:
Where is Peggy Venable getting that we have the cash to fund Medicaid caseload and cost growth now? We would have to dip into the rainy day fund to pay for Medicaid now one way or the other and that is the opposite of the very approach for which she praises Dewhurst last session. The way she refers to the $16 billion of stimulus funds you would think it was free money, not taxpayer dollars nor specifically tied to certain programs and uses. The allowable uses of stimulus funds are very narrowly described by federal statute and rule.
Only about 1/3rd of it can technically be more freely used although it is wisely designed by the feds, as we are figuring out, for the state’s Medicaid program shortfalls expected in this economic downturn. Early in the process the leadership decided we would underpay for our Medicaid needs and free up general revenue to pay for other programs in other areas of state government from education, arts to criminal justice. Now late in the game they have decided to back track and want to take the very opposite approach of funding Mediciad.
They have two choices 1) trim off a billion dollars or more from all programs across the board which will be very difficult if not impossible to do at this point since the conference committee is already moving quickly through the process approving programs and especially when it comes time for the legislature to vote on a final product drastically different than they already approved earlier in the session or 2) dip into the rainy day fund which again will lose votes from members who wanted to retain those funds for the very large expected structural deficit facing us next session.
This is a game, we pay for a portion now, slightly dip into the rainy day fund and sell it as a way of being conservative because we are better preparing for the large deficit we will face next biennium or we pay for it all in two years as we traditionally do as a supplemental and sell it today as being conservative because we did not tap into the rainy day fund to balance our budget. Either way we will find ourselves dipping into the rainy day fund. As previously mentioned, cutting a billion dollars worth of programs across the board is too difficult and there is no way to cut only programs in health and human services when the majority of that budget is Medicaid. The question is do we want to do it once by taking care of all of the needs and structural deficit in two years or twice by paying for a portion now for the needs and paying for the structural deficit in two years.
I suspect the leadership is trying to do a little bit of both, cutting programs and dipping into the rainy day fund. Personally. I think the leadership has found that they can not balance the budget without using rainy day funds since the two versions of the bills are very different in their funding approach, very little money is set aside for other bills in comparison to previous sessions, and there are too many outstanding issues both chambers left for the conference committee to fund. They are looking to blame the Medicad program so they have an excuse to tap into the rainy day fund.
The interesting part of the scheme is how it will be sold to the public as being conservative and bought by people like Peggy Venable as being such. Let the games begin!
Reply »
Edward R. Murrow says:
The composite of opinions is essentially correct. Past GAAs (and it goes back further than four sessions) have shorted Medicaid. Most often a supplemental bill is required to close the gap.
Everyone ackowledges that fully funding Medicaid limits current options.
However, you must acknowledge that the requirements of a billion dollar supplemental bill limits the funding options for each and every biennium that this practice continues.
To view this issue fairly, one must step back from the personalities, friendships with key players and motivations (real and perceived). Purposefully underfunding an entitlement program (particularly when it is not a dire situation–like 2003)and passing the cost to the next legislature cannot be reasonabley viewed as a good practice.
Reply »