Texas’s Brilliant Plan to Cut Medicaid for Disabled Children
Should kids really lose therapy services to help pay for property tax relief?
The Texas Legislature, as established by the constitution, is both evidence of the state’s historical commitment to limited government and a bulwark against a more interventionist state. Regular legislative sessions last just 140 days every other year. An inevitable result of this system is that every session, for good or for ill, a lot of legislation is killed. But as Dan Patrick announced in January, shortly after being sworn in as lieutenant governor, it’s “a new day” in Texas. And a curious backlash that has emerged over the past few weeks illustrates the converse possibility: sometimes a bill, being hurried along the path, will survive the passage without being fully considered until after the fact.
A provision in the two-year state budget for the forthcoming biennium illustrates the potential pitfalls of that situation. Last month Emily DePrang, of Quorum Report, reported that advocates for children’s health were becoming alarmed about a provision calling for severe cuts to the Texas Medicaid Acute Care Therapy Program. The budget calls for about $400 million worth of cuts to the program (which is, like other Medicaid programs, funded by state and federal dollars). Put differently, as DePrang explained, here’s what that means:
As written, they’ll slash by 25 to 90 percent what Texas pays for medically necessary physical, occupational and speech therapy through the Texas Medicaid Acute Care Therapy Program, which serves about 440,000 poor people with severe disabilities each year, most of them children. Advocates say at least 7,500 therapists will lose their jobs and 60,000 children will lose access to medical care because of the cuts. [The Texas Health and Human Services Commission] can’t refute these claims because it conducted no research in potential impact before announcing the new rates on July 8th.
Shortly thereafter, a group of home health care advocates, joined by families of children with disabilities, filed suit against HHSC. The lawsuit asked the judge to order the state to delay implementing the cuts, which were originally scheduled to take effect September 1st. The suit has now been withdrawn, pending a hearing on the subject tomorrow at HHSC. Since then, more than 60 Democrats have called on the agency to proceed with caution, if at all.
What’s striking is that a number of Republicans have done the same. As of August 20th, half a dozen Republicans had sent letters of concern to HHSC Commissioner Chris Traylor, asking him to hold off on implementing those changes until the probable effects could be assessed. Joe Straus, the Speaker of the House, said the same in a Facebook post on September 10: “I expect the Commission to keep us in compliance with federal law as it works through a new proposal. I also believe it is the agency’s responsibility to inform the Legislature if the proposed reductions would harm access to care and network adequacy.” And last week, Robert Garrett, of the Dallas Morning News, reported that Representative John Otto and Senator Jane Nelson–the chairs of House Appropriations and Senate Finance committees respectively—have sent their own letters to Traylor, insisting that the cuts be implemented only if access to care is preserved, and if the state remains on the right side of federal law.
In general, I’m no friend of Medicaid, and I was cynical about the backlash at first: if legislators didn’t want to cut therapy for poor disabled children, they shouldn’t have voted for a budget that does exactly that. Still, there’s something suspicious going on here. The stated explanation for the cuts, per HHSC, is that the current payment rates in Texas, for home health care aides and outpatient rehab facilities are too high compared to national norms. The agency has provided some data to that effect, which shows that in 2013 Texas’s published payment rates were higher than those in four other states: Florida, California, Minnesota, and Arizona. For all I know it may be true that Texas has an inefficient approach to this particular program, but the data on offer doesn’t convince me of that. Two of the four states in the comparison are prima facie flawed examples: Florida was sued in 2011 for skimping on its Medicaid payments, and California’s 2013-14 budget represents Governor Jerry Brown’s effort to put the state on sounder fiscal footing, meaning that it included serious spending cuts compared to previous budget cycles.
Plus, a look back at the session makes it clear that the stated explanation is nothing more than an ex post facto rationalization.
On April 1, the House passed its biennial budget bill, which came in at $209.8 billion, and included $62.9 billion for Medicaid. On April 14, the Senate passed its version of the budget, which was bigger, at $211.4 billion overall, but included $800 million less for Medicaid. On May 29th, after House and Senate budget conferees hashed out their differences, both chambers passed the final budget, which authorized $209.4 billion in spending for the 2016-17 fiscal biennium. Of that, $61.2 billion was appropriated for Medicaid–less than either chamber had sought in their respective budgets.
There was a widespread impression, at the time, that the House had gotten rolled in the conference committee. “On most of the high-profile disputes, the Senate won out,” wrote Aman Batheja at the Texas Tribune, pointing out that the Senate had prevailed on the inclusion of property tax relief, and that the House had lost its bids for more funding for Medicaid and schools.
That impression was fairly common among the representatives themselves. They had obviously been happy with the House’s version of the budget, which passed on a 141-5 vote. And even at the time, a number of my sources expressed qualms about the Senate’s plans. School funding was the biggest area of concern for House Democrats and Republicans, including some very conservative Republicans, who warned that if the Lege didn’t provide enough funding for schools, the courts would. But the Senate’s proposed Medicaid cuts were also contentious. On April 22, for example representatives Sylvester Turner, a Democrat, and Bryan Hughes, a Republican, spoke at a rally at the Capitol, where they warned that the Senate’s proposed budget would necessitate severe cuts to Medicaid therapy services. When the conference committee budget came back to the House floor for final passage, John Zerwas and Dan Huberty, both Republicans, flagged concerns about the cuts now in question.
As I saw it, though, the cuts to schools and Medicaid were inevitable. The Senate budget was bigger largely because Senate’s budget writers had, at the behest of the lieutenant governor, included a couple billion dollars for property tax relief and tacked several hundred million dollars onto the House’s border security plan. Patrick had made campaign promises about both of those priorities, and he was stubbornly unwilling to compromise on either. With Governor Greg Abbott keeping his own counsel, the best the House could do was damage control:
Based on Dennis Bonnen’s anhedonic layout last night, and the skeptical questions offered by both Republicans and Democrats at the back mic, I gather the House isn’t thrilled about this minor and ephemeral “relief” either. But in the absence of intervention from Greg Abbott (the governor), all the House could really do was what it did. Using his sales tax cuts as leverage in the negotiations, Bonnen was able to talk the biennial cost of the plan down by about a billion dollars, and he flatly refused the Senate’s scheme to exempt property tax relief from counting against the spending cap. The Senate nonetheless got a hefty property tax relief plan, worth about $1.3bn this biennium. That explains the House’s other two losses: to stay under the spending cap (with a little bit of breathing room), the conferees gave up about $700m for public education, about $500m for Medicaid, and a few bits and pieces here and there.
A primer, for any legislators who still don’t realize how things work here: contrary to what you might hear in some right-wing circles, Texas is a fiscally disciplined state. The economic and population growth we have experienced over the past thirty years have translated as proportionate growth in the state’s revenue collections and biennial spending. Meanwhile, we continue to maintain one of the lowest rates of state spending per capita in the country, as well as one of the lowest average tax burdens per capita. With more five million children enrolled in Texas public schools, education is the biggest area of state biennial spending. Medicaid is the second biggest. Everything else has been pretty well whittled to the bone already, so we can provide for schools and Medicaid.
In other words, if a feckless lieutenant governor insists that the Senate bring him a budget including more than a billion dollars for a poorly conceived campaign promise, and the Senate Finance chair rubber-stamps the idea, and the governor doesn’t tell either to take a long walk off a short pier, then Texas is going to get serious cuts to schools or Medicaid or both.
Since Texas’s Medicaid spending eats up about a third of the total budget, I’m not sure why the Senate decided to focus cuts on the relatively small program that provides life-saving therapy to disabled children. Several of the conferees should be able to explain. Charles Schwertner, who chairs the Senate Health and Human Services Committee, led the conference negotiations on health care spending; in a statement, his office described the cuts as “a reasonable compromise,” but provided no further explanation of why that would be the case. Lois Kolkhorst, who took an interest in the Medicaid Acute Care Therapy program as chair of the House Public Health prior to winning a Senate seat last year, was also a member of the conference committee; she hasn’t defended the cuts either.
And Nelson, of course, was the Senate’s chief budget writer: her newfound concerns, as expressed in her letter to Traylor, are telling. HHSC should, she informs Traylor, “follow the Legislature’s clear written instructions and intent that adjustments to Medicaid therapy rates proceed in a manner that preserves access to these important services.”
As it stands, in other words, every legislator other than Schwertner who has weighed in publicly on the cuts has been opposed to them. That includes Nelson, who led the Senate’s effort to pass a budget consistent with Patrick’s stated preferences, even though it was perfectly clear that the children of Texas would be pay the price.
Otto, by contrast, is on sound footing when he notes, in his letter to Traylor, that “access to care has always been a priority to the Texas House;” as Appropriations chair, the budget he brought to the conference committee didn’t include these cuts. Nelson, though? The budget, thanks to the Senate, provides clear written instructions directing HHSC to make the cuts. She can hardly blame Traylor for implementing the budget bill she authored. Traylor wasn’t even named commissioner of HHSC until June 5th, after the session ended.
This is a pretty sloppy way to run a major state, clearly. Still, we shouldn’t make poor disabled children pay the price for political exigency. HHSC should hold off on implementing the cuts as planned. And if it doesn’t, the federal government, via the Centers for Medicaid and Medicare Services, should intervene, as US Representatives Joaquin Castro and Gene Green, along with nine other Democrats in Texas’s Congressional delegation requested in a letter to CMS this weekend.