More on the Medicaid projections
Wed May 6, 2009 11:58 pm

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.

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