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As always, the hole is bigger than we thought

Remember how the Republicans in the Lege underfunded Medicaid by $4.5 billion, which they will have to tap the Rainy Day Fund in 2013 to deal with, in order to make the budget for this biennium appear to be “balanced”? Turns out we’re going to need a lot more than that.

Tom Suehs

Kudos to the Quorum Report’s John Reynolds for reporting State Health and Human Services Commissioner Tom Suehs’ latest prediction on the looming state Medicaid funding shortfall which will have to be addressed by the Legislature when it meets in January 2013.

As has been widely reported, the Texas Legislature passed a so-called “balanced” budget by intentionally under-funding the Medicaid program by $4.5 billion, essentially choosing to postpone payment of that bill until 2013. Now, escalating caseload growth will bump that figure into the atmosphere, Suehs told hospital administrators in a speech Wednesday.

According to Reynold’s report:

That multi-billion dollar bill to sustain the Medicaid program – one of the state’s biggest cost drivers – will drop on lawmakers’ desks next January at the same time that demand for services elsewhere in the state budget continues to increase.

Suehs told the Texas Hospital Association that his message isn’t all that different from the one he sent two years ago. “I basically said something to the effect, ‘I don’t see how the Legislature’s gonna get out of this session without some form of revenue.’ I got in trouble for that,” Suehs said. “And I’m going to say the same thing today. I think I have a little bit more data with me today.”

Leaving a shortfall in the current budget has “a compounding effect” on future needs, Suehs told QR after his remarks. Still, he acknowledged at the conference that the level of need in the Medicaid budget concerns him.

“I don’t sleep some nights just thinking about having to lay that type of number out at some point,” he said.

Reynolds goes on to point out that the Legislature probably will spend some $7 billion left in the state’s Rainy Day Fund to cover part of the Medicaid shortfall. But Sueh’s predictions highlight the importance of the new Medicaid “transformational waiver” I highlight in my column in Wednesday’s print edition of the Chronicle. Approved by the Obama Administration in December, the new waiver empowers local hospital districts to re-define the rules for Medicaid reimbursements. Proponents believe the changes, if done correctly, could save taxpayer dollars, and help fund more patients who will be eligible for care under the federal health reform law.

Couple things to note here. One is that the recent uptick in sales tax revenue means that the Rainy Day Fund is a bit fatter than it was at sine die. That has led some folks to call on Governor Perry to call a special session to use some of that extra dough to mitigate the second year of cuts to public education. The TSTA has a petition you can sign if you want to join in that call. I support the effort, but I expect it to go nowhere for precisely this reason, which is the main reason why the Lege and Perry resisted so mightily calls to use the Rainy Day Fund originally. You can’t spend what’s already spent.

Suehs wasn’t the only Perry appointee going off the reservation. Texas Education Commissioner Robert Scott has been talking out of school (as it were) as well.

Scott warned school administrators that the ban on social promotions – a legacy of Gov. George W. Bush – will be lifted unless lawmakers provide money to help struggling students.

More money also will be needed to pay for the state’s new school accountability system, whose high-stakes testing may be going too far, Scott told school officials.

Scott’s statement that believes testing has gone too far drew a predictable rebuke from the sort of people who want accountability and standards but don’t want to pay for them. You do have to wonder what Perry is thinking, with his hired hands making trouble like that. Anyway, in re: schools, even all that Rainy Day money won’t get at the real problem:

Everyone agrees that Texas needs to do a better job of educating the state’s five million students in public schools. Folks like [Scott] McCown and [Sen. Leticia] Van de Putte, who serves on the Senate Education Committee, say it will take more money.

“What folks just don’t appreciate is how much we have cut,” McCown said, noting that state tax revenue would have to increase $13 billion a year to reach 1994 levels – the peak year for a measure of “how much of our total economy went to state and local taxes.”

Political realities mean that significant tax reform won’t happen next session, he said. It will take a modest, smart approach to put Texas on the right road resulting in several billion dollars of additional revenue, he said.

“It would be a responsible use of the rainy day fund and it would include revenue measures such as increasing the cigarette tax and eliminating the high cost gas exemption from the severance tax,” McCown said.

“If we don’t do that, then we are gong to face really serious damage to our schools and just not being able to help people as we move out of the difficult economic times in this recovery,” he said. “Regular Texans have to speak up loudly about what they want but we can have responsible approach to meeting the state’s needs in the next session if they do that.”

Well, that’s what the next couple of elections need to be about. Nothing will change until the Lege and the state leadership changes. EoW has more.

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