State & National Issues Affecting Health Care in the 81 st Legislative Session Presentation to ATCMHMR Quality Leadership Team January 23, 2009 Eva DeLuna Castro deluna.castro@cppp.org
Outline Overview of the state budget and state health care spending Recent state budget developments; what they might mean for community MHMR services Mental health policy issues What to do in the short-term and long-term
The Texas State Budget for 2008-09 Biennial Total: $169.8 billion Property tax cut, 8% K-12 Ed. 18% Federally funded = shown in white; other areas are General Revenue + GR-Dedicated + Other State Funds. Higher Ed. 12% Federal 30% HHS 19% Highways 7% Prisons 3% Other 7% HHS 14% K-12 Ed. 5% Highway 4% Other Federal 3%
Public School Spending per Enrolled Student, 2006-07 New Jersey New York $14,675-1st $14,206 Arkansas California Louisiana Florida TEXAS Oklahoma Utah $8,905 $8,834 $8,657 $8,493 $8,048-41st $7,084 $5,551-50th Source: NEA Rankings
Health Spending in 2008-09 Health Care Spending: $54.5 billion All Funds HHSC Medicaid: $26 b AF CHIP: $2 billion AF; Frew: $1.8 b AF Rest of Budget 68% Health Care, 32% HHS Agencies 26% Higher Ed & Teacher Health Care 4% TDCJ & TYC 1% State Employee Health Care & Other 1%
The $9 Billion Hole (Jan. 09 update) $10.0 Cost of property tax cut Revenue from special session tax changes $7.5 $7.0 $7.2 $7.4 $7.5 Billion $ $5.0 $2.5 $2.2 $2.5 $2.7 $2.7 $2.8 $0.7 $0.0 2007 2008 2009 2010 2011
New Revenue Replaces Only 40% of Lost Property Taxes In billion $ Franchise tax Tobacco tax Used car sales TOTAL REVENUE May 06 fiscal note 6.8 1.4 0.1 8.3 2008-09 Jan 09 Revenue Estimate 3.2 1.9 0.0 5.1 May 06 fiscal note 7.7 1.3 0.1 9.1 2010-11 Jan 09 Rev. Estimate 3.6 1.8 0.0 5.4 Cost of property tax cut -14.2-14.2-14.9-14.9 SHORTFALL -$5.9 -$9.1 -$5.8 -$9.5
Pre-Session Developments Governor/LBB Budget instructions for 2010-11 (May 08): baseline was not a true current services budget that would allow for cost increases; only K-12 enrollment and Medicaid/ foster care caseloads (mandatory), state debt service and pension obligations, and adult prison population maintenance could be in base. Agencies were asked to prepare 10% GR cut impact estimates. Oct. 08: Governor urges continued fiscal restraint (travel budgets)
More Pre-Session Developments Hurricane Ike; National financial and economic crisis, slowing of state economy HHS: $1.2 billion shortfall for 2009 LBB adopted growth rate for 2010-11 budget on Nov. 14, 2008 (constitution limits growth of spending from undedicated tax revenue). Economic forecasts at the time ranged from 7.7% to 14.8% growth in 2010-11. Adopted rate of 9.14% is the lowest ever.
HHS Agency Base Budget Changes for 2010-11 $4.0 $3.5 b Biennial billion $ $3.0 $2.0 $1.0 $0.0 $3.2 $2.6 b $2.2 DFPS DARS DADS DSHS HHSC All Funds General Revenue ($1.0)
HHS Exceptional Items for 2010-11 $7.5 $5.0 $2.5 Biennial billion $ Program Enhancements System Operations Improvements Increase Capacity, Improve Quality Other Current Services All Funds General Revenue $0.0 Medicaid/ CHIP Current Services $2 billion in new GR for current services; $4.4 b All Funds
DSHS Base Request $750 M illio n $ A ll F u n d s $500 $250 $0 2007 2008 2009 2010 2011 Substance Abuse $160 $165 $153 $157 $157 NorthSTAR Waiver $99 $101 $100 $100 $99 Community MH Crisis $0 $27 $55 $41 $41 MH Svcs-Children $63 $64 $62 $63 $63 MH Svcs-Adults $283 $290 $281 $275 $275
DSHS Exceptional Items GR All Funds #9 Substance Abuse Programs #10 Community Mental Health Services 3 projects: (1) Continue crisis redesign implementation begun in fiscal 2006, by enhancing Psychiatric Emergency Service Centers in underserved areas, Crisis Respite Services for children, and external evaluation; (2) Provide intensive engagement & transition services to 4,163 adults and 630 children; (3) Expand availability of intensive packages of ongoing services (3,470 adults, 497 children), targeting those in transition services. #1 Maintain current operations $66.2 m Expand adult Medicaid benefit to cover outpatient detox and counseling; expand prevention; increase rates for treatment providers; expand detox services; provide recovery support funds and service coordination; expand Outreach, Screening, Assessment, & Referral Provider services; expand availability of detox & residential treatment for persons with cooccurring MH diagnoses; increase availability of medication-assisted treatment. $88.3 m $75.8 m Maintain funding for various public health programs, including Community MH Crisis Services ($27 million, all GR) $81.7 m $99.3 m $76.7 m
DADS Base Request for MR Community Services $100 Million $ A ll Funds $75 $50 $25 $0 2007 2008 2009 2010 2011 Residential $4.1 $2.9 $1.5 $0.4 $0.4 Independent Living 19.5 20.1 20.4 20.6 20.6 Respite 14.3 14.7 14.9 15.1 15.1 Therapies 12.6 12.9 13.2 13.3 13.3 Day training 33.3 34.3 34.9 35.2 35.2 Employment services 7.7 8.0 8.1 8.2 8.2 Other 0.5 2.7 3.7 3.3 3.3
DADS Exceptional Items GR All Funds #3 MR Safety Net $31.3 m $31.3 m Restores the funding that was cut in 2003 for General Revenue-supported services provided by MR Authorities to people on waiting lists or people who don t quality for Medicaid-funded services. Would provide an additional $23.6 million (biennial) to MR Community Services to serve 1,651 individuals (average monthly) and $7.7 million to fund MR In-Home Services for 2,061 individuals (per year). #4 Prevention of Institutionalization (HCS) $4.6 m $11.1 m Waiver services for another 147 individuals (average monthly in fiscal 2011) through two initiatives: (1) Reducing the number of children admitted to state schools, and (2) Continuing to serve individuals in the community who might be at risk of being institutionalized after an emergency or crisis. #1 Maintain fiscal 2009 service levels $190.7 m $440.5 m Maintain funding for various aging and disability services, including Community Attendant Services ($3.8 million), Home and Community-Based Services (HCS - $161 m), MR Community Services ($0.7 m), Promoting Independence community-based svcs ($3 m)
Once the Session Starts Revenue Estimate: Texas still not in a recession, but much worse than Nov. 07 forecast. Comptroller can revise revenue estimate at any time before the session ends; also prepares a certification estimate. House and Senate issue slightly different 2010-11 proposals (Senate has contingency of $200 million more GR for Aging & Disability Services: 6,000 slots for community-based developmental disabilities care funded through Medicaid; $148 m more GR for Educator Incentive Pay) Governor s Budget Proposal Supplemental Spending Bill for 2009
Texas State Revenue for 2010-11 Biennial Total: $168 billion Licenses, Fees, Fines, Tolls 8% Other Tax Revenue 8% Motor Fuels Taxes 4% Motor Vehicle Sales Tax 3% Franchise Tax 5% Sales Tax 27% Interest & Investments 4% Other nontax 8% Federal 33% HHS 20% Education 5% Highway 4% Other Fed. 3%
More Details on the Revenue Estimate All Funds: 2010-11 revenue is $168 billion the same as All-Funds spending in the current biennium (2008-09) General Revenue: this is the part of the budget that the Comptroller must certify. GR estimate is $77.1 billion, a $9 billion (or 10.5%) drop from available GR for 2008-09 Property Tax Relief Fund: $8.5 billion (not in GR) Rainy Day Fund: $9.1 billion balance by 2011 also available for spending
The Economic Assumptions (Winter 2008-09 Forecast) 7.0 6.0 Percent 5.0 4.0 3.0 Texas Unemployment Rate 2.0 1.0 Texas Real GSP Growth 0.0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
What a Bad Economy Means for Health Care Private sector impact: fewer people get health insurance as an employer-sponsored benefit. Texas already had one of the worst rates in the nation: 50% of Texans had job-based coverage in 2007, vs. 59% U.S. average. (Also, 25% uninsured in TX, vs. 15% uninsured in U.S.) Public sector: higher demand for services funded by federal, state, or local government, at the same time that taxes and other government revenue are declining National push for health reform: if included in a federal economic recovery package, could happen sooner rather than later (example: SCHIP reauthorization)
Inflation & Population Assumptions (Winter 2008-09 Forecast) 8.0 6.0 State/Local Govt. Inflation Consumer Inflation (US CPI) Percent 4.0 2.0 0.0 Texas Population Growth 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (2.0)
Senate Proposal for 2010-11 Property tax cut, 9% K-12 Ed. 17% Biennial Total: $171.5 billion 1% All Funds biennial increase compared to 2008-09; GR-related increase of only 1.7% Higher Ed. 13% Federal 31% HHS 19% Highways 6% Prisons 3% Other 7% HHS 15% K-12 Ed. 5% Highway 4% Other Federal 3%
More on the 2010-11 Budget NOT a current services budget (that would have required at least $9 billion to $10 billion more) Proposals exceed pay as you go limit (Senate bill spends $83.8 billion in GR, versus House s $83.4 billion GR; Comptroller says $77.1 billion is available ) requires more GR for Comptroller to certify, or a four-fifths vote of each chamber Complies with limit tied to economic growth (9.14%) Also below limits on welfare spending ($131 million will be spent on TANF cash grants, well below $1.5 billion limit) and debt service (including unissued bonds of $3 billion for cancer research, $5 billion for transportation)
Health Spending in 2010-11 (Senate) Health Care Spending: $58.7 billion All Funds HHSC Medicaid: $29.7 b AF CHIP: $2.3 billion AF; Frew: 09 rates Rest of Budget 66% Health Care, 34% HHS Agencies 28% Higher Ed & Teacher Health Care 4% TDCJ & TYC 1% State Employee Health Care & Other 1% $28 billion in Federal Funds, $26 b GR-related, $5 b Other
Where New GR for Health Care Would Go: $499 million to make up for a less favorable Medicaid match; $1.7 billion for Medicaid caseload growth and to maintain Frew rates; $113 million more for CHIP caseloads; $27 million to maintain 2009 service levels for new community MH crisis services $185 million more for state employee/dependent health care (assumes 7.5% annual growth in claims); $52 million more for Higher Ed Group Insurance; $46 million more for TRS-Care (for retired teachers)
New GR for other HHS Programs $50 million to maintain Integrated Eligibility and Enrollment staff and pay at August 2009 levels $65 million to maintain Child Protective Services staff and pay at August 2009 levels; $40 million to make up for lost funds (Medicaid targeted case management) $89.5 million more to maintain DADS community care waiver programs. (More GR would be needed to continue plan to eliminate waiting lists.)
Balancing the 2004-05 State Budget 2003 session: General Revenue shortfall of $15.6 billion for 2004-05 Cuts to 2003 Budget: $1.4 billion Cost shifting: $1.0 billion Smoke and mirrors : $1.2 billion Rainy Day Fund: $1.3 billion Federal Fiscal Relief: $1.4 billion Revenue Measures: $1.8 billion Cuts to 2004-05 Budget: $7.5 billion
Where Additional Revenue Rainy Day Fund Could Come From Tax increases (soda/junk food, tobacco, alcohol, gasoline) Federal Economic Recovery package (U.S. House plan has $$ for boost in Medicaid match, COBRA aid for unemployed, Community Health Centers, training health professionals) Bad ideas: Gambling Even worse idea: More tax cuts, or swapping sales taxes for property taxes
HRO* on Mental Health in 81 st Session Increase funding for crisis services; designate funds for underserved communities, intensive ongoing services, and services for youth Divert juveniles with MH issues from criminal justice system by providing treatment and other resources; suspend, rather than terminate, CHIP/Medicaid benefits for incarcerated youth Require all agencies serving youth to use same formulary for medications to ensure consistency for youth who move from one facility to another *House Research Organization Topics for the 81st Legislature, www.hro.house.state.tx.us/focus/topics81-1.pdf
HRO on Mental Health (continued) State School investigation by U.S. Dept. of Justice; House select committee study on services for ICF-MR-eligible individuals Possible proposals: strengthen complaint investigations; establish independent monitor for state schools; consolidate state schools to free up resources for community care alternatives; increase pay, training, and education requirements for direct care staff
HRO on Mental Health (continued) Continue efforts to reduce waiting lists for Medicaid waiver programs providing community services to individuals with cognitive or developmental disabilities Require private insurance parity in coverage for mental health services similar to health coverage for other illnesses Provide state-funded incentives for counselors to work in community MH centers that specialize in services for veterans, especially in South TX
Opportunities to Get Involved House Appropriation and Senate Finance hearings on the budget; policy committee hearings on health bills Federal and local government budget processes Revenue coalitions
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