AUSTIN – Texas Medicaid spending is rapidly growing, driven by an increase in Medicaid enrollment and costs, according to a report published today by the Texas Public Policy Foundation.

 “The current Medicaid program in place is unsustainable and rising at a more rapid rate than state revenue,” said Arlene Wohlgemuth, Director of the Foundation’s Center for Health Care Policy. “In 2011 alone, Medicaid expenditures totaled approximately $28 billion, providing long-term care services and support to nearly 400,000 aged and disabled Texas Medicaid enrollees. With a current interest list for long-term community-based care services exceeding 100,000 people, and the senior population expected to double by 2030, the demand for and cost of these services will continue to increase.”

The Foundation commissioned healthcare experts James Capretta and his team to provide recommendations to Texas on how to reform its Medicaid-financed long-term care program to become sustainable and affordable for Texas taxpayers while also providing high quality services to those who need it most. The findings, Assuring a Future for Long-Term Care Services and Supports in Texas, are available on www.texaspolicy.com. This report is a companion piece to an earlier study, Medicaid Reform: Constructive Alternative to a Failed Program, that recommended reforms to the portion of Medicaid that serves low-income, non-disabled women and children.

This report offers a new approach to providing Long-Term Care Services and Support (LTCSS) to Texans in need of assistance with the goals of meeting the needs of disabled and elderly state residents all the while providing budget control for the state. This concept stems from the belief that providing more control to Medicaid participants and their caregivers can offer greater efficiencies by targeting program resources to those in need with increased patient satisfaction. The state’s role would largely shift, except in the case of nursing home care, from providing direct reimbursement of services to providing oversight of the program.

 “One of our recommendations to restructure Medicaid is with a block grant, which would allow Texas to streamline its long-term care system to better meet the needs and preferences of its residents while staying within budget,” said Wohlgemuth. “The current ‘one size fits all’ approach often entitles Medicaid enrollees to receive unnecessary, even unwanted benefits, and has the unintended consequence of incentivizing providers to deliver an excessively broad range of services to enrollees.”

 While it is true that making a fundamental shift in Medicaid will not be easy, it should be noted that its potential for success should be evaluated on what the program will look like in the future if reforms are not adopted. One way or another Texas, and every other state, will be forced to make changes in Medicaid to reduce costs. The only question is how they will do it.

 Wohlgemuth adds that the reforms recommended here would ensure that the program’s participants have just as much incentive as the state to get the best and highest value use out of every available Medicaid dollar. With incentives properly aligned, and more budgetary control provided to the state government, Texas would have the levers necessary to make adjustments over time to balance the needs of participants with the costs imposed on taxpayers.

 

 Arlene Wohlgemuth is the Executive Director and Director for the Center for Health Care Policy with the Texas Public Policy Foundation, a non-profit, free-market research institute based in Austin.

 

The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin.

 

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