Behind the Medicaid projections
Wed May 6, 2009 5:30 pm

A closer look at Lt. Gov. David Dewhurst's announcement yesterday about a $1 billion projected increase in Medicaid costs suggests the Senate is using the revised forecasts as a bargaining device with the House.

Since 2001, budget writers have been presented with two projections of Medicaid costs: a high (usually more realistic) number from the Health and Human Services Commission, and a lower one from the Legislative Budget Board. An unspoken understanding for four sessions has been for conferees to adopt the LBB projections, as it makes it easier to certify the budget. The low-balled projections were then covered in the next supplemental budget. Late session updates -- as happened this week -- have been generally ignored.

Sen. Tommy Williams, who is the Senate point person on Article II says the Senate is "being more honest about what Medicaid will cost us" by updating the projections in the budget document on the table. But a side effect of the change in policy is to capture all the expected costs immediately -- rather than postpone them to the next supplemental budget.

With the "structural deficit" created by the new franchise tax looming, 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.

Dewhurst's announcement about new numbers failed to put the update in context: budget writers have had higher Medicaid projections before them since the beginning of the session. What has changed is the Senate's policy of  spreading Medicaid costs into future budgets.

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