Transcript Slide 1

Texas Revenues, Medicaid & National Health
Reform
TMA Select Committee on Medicaid, CHIP, and the
Uninsured
February 13, 2010
Anne Dunkelberg, Assoc. Director, [email protected]
Center for Public Policy Priorities
900 Lydia Street - Austin, Texas 78702
Phone (512) 320-0222 (X102) – www.cppp.org
www.texasvoiceforhealthreform.org
1
LBB’s Best Case Scenario
Assuming revenue growth matches growth in expenses
Current
Budget
2012-13
Budget
General Revenue
ARRA (instead of GR)
Cash on hand
$75.0 billion
$6.4 billion
$2.4 billion
$75.0 billion
$0
$0
Property Tax Relief
Fund carryover
Permanent School Fund
$3.0 billion
$0
$0
$1.2 billion
Other adjustments
TOTAL GR BUDGET
$0.2 billion
$87.0 billion
$76.2 billion
GAP
$10.8 billion
2
Budget Scenario for 2012-13
$100
Additional
GR Needed
$7 b
ARRA instead of GR
$75
$1 b
GR for Higher Ed
None
Local School Tax Cut
(GR and PTF)
$3 b
$50
Other GR for K-12
$3.3 b
$25
GR for HHS
$300 m
GR for Prisons
Other GR*
$0
2002-03
2004-05
2006-07
2008-09
2010-11
$700 m
2012-13
3
Sources of State Revenue 2009
Total $84.5 billion
Taxes, 45%
Other, 5%
Interest,
Investment
Income, 2%
Federal
Funds, 37%
Licenses,
Fees, Fines,
Penalties, 9%
Lottery, 2%
Source: Comptroller of Public Accounts, Annual Cash Report
4
Major State & Local Taxes in Texas, 2009
Other
State
20%
Local
7%
Sales
Tax –
32%
State
25%
School
26%
Property
Tax –
48%
Special
Districts
6%
City
8%
County
8%
Sources: Comptroller of Public Accounts, Annual Cash Report, Annual Property Tax Report.
5
How to Balance 2012-2013?
Options for a Balanced Approach:
“Easy Money”
Potential Revenue for
2012-13
Economic growth with no
change in revenue system
Smoke and mirrors
$800 million for
each 1% growth
$1.5 billion
Payment delays, etc.
6
Funding a Balanced Approach: Rainy Day Fund
Rainy Day Fund
Potential Revenue for 2012-13
Beginning balance
$8.2 billion
Growth during 2012-13
$1.4 billion
TOTAL AVAILABLE
$9.6 billion
Current Balance: expected to reach $8 billion by end of fiscal 2011;
another $922 million deposit slated for Fall 2011
Uses:
1991: $29 million for public schools
1993: $200 million for prisons
2003: $1.2 billion — the entire balance that was projected at the time
— was appropriated for CHIP and Medicaid shortfalls, retired teacher
health care, and for brand-new Governor’s Enterprise Fund
2005: $1.9 billion, for existing shortfalls, and for 2006-07 child
protective services reforms and new Emerging Technology Fund
• 2/3 vote of each chamber needed to spend RDF “at any time and for any
purpose”; slightly less (3/5 vote) required when state revenue is expected
7
to drop in upcoming biennium
Options for a Balanced Approach:
Potential Revenue for 2012-13
Eliminate Current Exemptions:
• Sales tax on business, professional services (Legal, stock & real estate
broker, accounting, management consulting – except health care)
$5.6 billion
• Eliminate high-cost natural gas exemption
$2.3 billion
• Eliminate recognition of optional % homestead exemption: $1.0 billion
• Eliminate freeport property tax exemption (constitutional) $850 million
• Eliminate 10% property tax appraisal cap (constitutional) $650 million
• Eliminate sales-tax timely filer and prepayment discounts $425 million
• Eliminate sales tax holiday
$100 million
• Eliminate gasoline-tax collection allowance
$100 million
• Eliminate CAPCO credits
$100 million
• Eliminate ineffective tax exemptions $100 million
• Eliminate reimbursement of school taxes for local tax abatements
$20 million
8
Options for a Balanced Approach:
Potential Revenue for 2012-13 (more)
Increases to Existing Taxes:
• Raise sales tax ½% (to 6.75% state/8.75% total, with
rebate for families in bottom 20% of income; 8 states would have
$3.0 billion
• Increase franchise tax rate from 1% to 1.25%
(Retail from 0.5% to 0.625%) $2.1 billion
• Raise gasoline tax by 5 cents per gallon (From 20¢
to 25¢ – 23 states now at 25¢ or higher) $1.6 billion
higher state rates)
– ($400 million to Available School Fund; $1.2 billion to State
Highway Fund)
9
Options for a Balanced Approach:
Potential Revenue for 2012-13 (more)
Increases to Existing Taxes:
Raise cigarette tax
From $1.41 to $2.00 per pack
$1.2 billion
Raise motor vehicles sales tax by ½%
From 6.25% to 6.75%
$450 million
Raise beer tax
15 states now at $2.00 or above
From 11 cents to 17 cents per six-pack
Last raised in 1984; 15 states would be higher
$100 million
10
Options for a Balanced Approach:
Potential Revenue for 2012-13 (more)
New Tax Options:
Quality Assurance Fee
$350 million
Plus federal match of $550 million
Soda tax
1 cent per 12 oz can of sugared soft drink $145 million
1% on revenues of hospitals, surgery centers
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Funding a Balanced Approach:
Beyond this Session
Potential Revenue for
Future Budgets
State personal income tax
Eliminate school property
tax abatements - Chap 313
Sales tax on Internet sales
Sales price disclosure
$14 billion net
(dedicated to
education)
$1.2 billion
$1.2 billion
$350 million
12
Medicaid in 2010-2011 TX Budget
• No National Reform effect (expansion begin 2014; no state share $$
until 2017)
• Avg. Budgeted Caseloads in SB 1 3,105,445 for 2010, 3,168,320
2011 “recipient-months”
• Actual January 1 enrollment 2,918,958; converts to 3.3 million
• Over 735 eligibility staff added since 9/1/09.
• Feb 1 HHSC report to LBB projects HHSC Medicaid about $387
million GR over budget by end of FY 2010 (i.e., just for current year).
• Texas getting 70.94% match now; 69.85% Jul-December. IF
Congress extends 2 more quarters, worth $925 million to Texas.
• HHSC has no “official” projection of current budget shortfall yet.
13
Medicaid in 2010-2011 TX Budget
•
Shortfall numbers make it obvious: without more revenue, there WILL
be deep cuts.
•
In 2003, Provider Rates were the largest category of cut. After partial
restorations, the total projected reduction in Medicaid and CHIP rates was
about $599 million.
•
Federal law Medicaid maintenance of effort required:
– From BBA 1997 (CHIP Statute): States cannot adopt Medicaid eligibility
criteria that are more restrictive than those in effect as of June 1, 1997.
– ARRA 2009 (stimulus): States cannot make eligibility standards,
methodologies, or procedures stricter than 7/1/2008; includes disability
standards or numbers served in community care waivers.
– If health reform passes, additional MOEs will apply: children in Medicaid and
CHIP through 2019; adults until Health Insurance Exchanges operational in 2014.
•
That leaves provider rates and “optional” adult benefits to cut
– 2003 Lawmakers rejected certain cuts: cutting off community care and
nursing home care; eliminating Rx coverage for aged, disabled, and
adult clients
– They DID eliminate services of LPCs, SWs, psychologists, LMFTs,
podiatrists, and chiropractors; and adult eyeglasses and hearing aids.
(Restored in 2005)
14
How National Health Reform Fits In:
Texas Update
15
Only the Highest-Income Families Have Better-ThanU.S.-Average Chance of Being Insured
36%
34%
24%
16%
11%
Below $25,000
$25,000 to $49,999
$50,000 to $74,999
$75,000 to $99,999
$100,000 and over
Texas average: 25.1%
42%
35%
29%
12%
Below poverty
100 to 200% of
poverty
200 to 300% of
poverty
Above 300% of
poverty
Source: CPS Annual Social & Econ. Supplement
16
www.census.gov/hhes/www/hlthins/hlthins.html
Employer-Sponsored Coverage Declining in Texas and
Nationwide, Even Before Recession
% of Residents With
Job-Based Insurance
75
U.S. Average
64.2
63.2
61.9
61
60.5
60.2
59.7
54
53.1
52.2
59.3
58.5
50.4
49.5
2007
2008
60
57.4
56.2
53
53
45
Texas
30
2000
2001
2002
2003
2004
2005
2006
Source: CPS Annual Social & Econ. Supplement
17
www.census.gov/hhes/www/hlthins/hlthins.html
Health Reform Basics
•
Key elements of both bills:
– Build on current system (Senate bill especially leaves curernt coverage potentially
unchanged for years)
– Medicaid expansion: cover all up to 133% or 150% FPL ($14,404-$16,245 for
one; $29,327-$33,075 for 4).
– Reform Private Health Insurance: standardize benefits, no price variation for
gender or occupation, limited age variation, no denial of coverage, no excluding
pre-existing conditions, no annual or lifetime maximums. Changes first for
uninsured, individual, small employer coverage.
– New Health Insurance Exchange(s) where private insurers’ options can be
compared and purchased (like Amazon or Travelocity for insurance).
• May or may not include Public or Non-profit plan option?
• HIE is only a framework: effectiveness depends on subsidies, market
reforms, standardized benefits, individual mandate, negotiating powers.
– Premium assistance up to 400% of FPL ($88,200 for family of 4)
– Out-of-pocket subsidies (reduces out of pocket for all consumers) and stoploss caps, too, to increase affordability reduce medical bankruptcy
– Individual mandate to have coverage (with exemptions)
– Some Requirements for employers to contribute, with exemptions for small
employers
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Texas Uninsured by Income Today……
6.1 million uninsured in 2008
>400% FPL
>$88,200
682K
300-400% FPL
$66,200-$88,200
1.611
Million
622K
250-300% FPL
$55,100-$66,200
<100% FPL
<$22,100/yr for
family of four
484K
1.06
Million
751K
200-250% FPL
$44,100-$55,100
898K
150-200% FPL
$33,100-$44,100
Annual income limits given for a family of four, 2009 federal poverty level
100-150% FPL
$22,100-$33,100
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U.S. Census, CPS
……And if House Bill Implemented Tomorrow
CBO: 4.7 to 4.8 million out of 6.1 million gain coverage
>400% FPL
<100% FPL
682K
300-400% FPL
1.611
Million
622K
484K
250-300% FPL
2.0 million
150-400%
FPL qualify
1.6 Million
751K
for help
w/premiums,
200-250% FPL
out-of-pocket
In Exchange
898K
150-200% FPL
100-150% FPL
Up to 1.8
million in
Medicaid:
• 1.3 million
expansion to
150% FPL
(adults)
•500K alreadyeligible (kids)
20
Who Remains Uninsured?
• CBO assumes small percentage opt not to be covered
(no penalty for lowest income and penalties much lower
than cost of coverage)
• If premium subsidies lower, (Senate version concerns),
larger share of low- & moderate income may stay
uninsured.
• Undocumented:
– no Medicaid/CHIP,
– no premium subsidy, possibly cannot buy @ full cost from
exchange
– Best estimates say 40% of undocumented in US TODAY have
private coverage
• Legal Permanent Residents:
– continued exclusion from Texas Medicaid,
– May be barred from subsidy, too, in first 5 years in US
21
Fiscal Benefit/Cost of
Health Reform to State
•
Medicaid expansion—up to 133% FPL(S) or 150% FPL (H)
•
•
“Static” Illustration based on current US Census data and Texas Medicaid costs:
HOUSE:
–
–
–
in 2008, 1.3 million uninsured Texas adults aged 19-64 who (a) are U.S. citizens and (b) have incomes below 150%
FPL.
At 2009 cost of ~ $305 per adult/mo., covering 1.3 million more adults = about $4.7 billion in new health care
spending.
Under HR 3962, Feds pay 100% of costs for 2 years, and 91% after that.
– In year 3, Texas’ 9% state share of the $4.7 billion would be would be about $421
million,
– And Feds pay the remaining $4.25 billion.
– In other words, about ten federal dollars in for every one state dollar.
– Plus multiplier effect of over $12.5 Billion (economic multiplier of 3.25 per
Perryman). (↑State tax revenues + ↓Local taxes avoided) nearly = GR costs
•
•
Lesson: Medicaid expansion, while not “free” for Texas, will yield substantial
economic benefits.
Texas economy will also benefit from federal premium assistance and out-ofpocket cost help to families from 150-400% FPL, which will not require any state
22
budget contribution at all.
Fiscal Benefit/Cost of
Health Reform to State
• Medicaid expansion—up to 133% FPL(S); same “Static” Illustration based
on current US Census data and Texas Medicaid costs:
• SENATE:
– in 2008, 1.0 million uninsured Texas adults aged 19-64 who (a) are U.S. citizens and (b)
have incomes below 133% FPL.
– At 2009 cost of ~ $305 per adult/mo., covering 1.3 million more adults = about $4.7
billion in new health care spending.
– Under HR 3590, Feds pay 100% of costs for 3 years: 2014, 2015, 2016
– In 2017 the Texas would pay about 5.14% or $188 million, with the federal share $3.47
Billion
– In 2018, Texas would pay 6.14% or $225 million, with the federal share $3.44 Billion
– In 2019 and thereafter, Texas would pay 7.14% or $261 million, with the federal
share $3.4 billion.
• $18 federal dollars for each $1 the state spent in 2017 on expanded Medicaid
coverage;
• $15 federal dollars for each $1 the state spent in 2018; and
• $13 federal dollars for each $1 the state spent in 2019 and thereafter
– Plus economic multiplier of 3.25 per Perryman
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Welcome Mat Effect
•
•
•
•
•
•
States that cover all children found that 50%+ of enrollment after
reforms were kids already eligible before reform but not enrolled:
“Welcome Mat” effect.
No Individual Mandate penalties apply to Texans below 100% FPL who
remain uninsured, but based on other states, over time more of our
currently-eligible Texas children will enroll in Medicaid.
Because Texas has very limited eligibility for adults today, there is
very low risk of Medicaid welcome mat effect for adults.)
UNLIKE state costs for newly-eligible adults largely borne by federal
budget, strong welcome mat response by already-eligible uninsured
Texas children would add significant cost to the state budget, because
state will be responsible for standard Medicaid share of just under
40% for those children.
If welcome mat effect were as powerful as 12-month enrollment
projected to be, the GR annual costs (at current costs and
demographics) could amount to $200 to $350 million (LBB vs. HHSC).
If 100% of the 440,000 Medicaid currently-eligible uninsured children
were to enroll today, the current annual cost to the state budget would
range from about $350 million to $466 million (LBB vs. HHSC costs),
based on the “usual” state’s share of ~39%.
24
Illustration: How House Bill Would Change
Texas Medicaid Budget
If Covered 1.3 million
new adults; 400K
kids, @ Current costs
and demographics
Fed Share
2008
$10.8 Billion
State Share
Welcome Mat
Kids: $400
million
Fed Share
Welcome Mat
Kids : $600
million
State Share
Expansion
Adults
$421 million
State Share
2008
$7.0 Billion
Fed Share
Expansion
Adults
$4.25 Billion
Baseline “Now” = Projected Texas
Medicaid Services Spending, 2008
(Texas HHSC)
Note: this does NOT model increased
admin costs.
25
Top Advocate Concerns for Final Bill
Affordability remains the top focus of consumer and low-income
advocates, and the experts we trust the most continue to advocate for
these provisions in the compromise bill:
(1) House bill’s superior premium assistance for people under 250%
FPL;
(2) Senate premium assistance for people between 250-400% FPL.
(3) House’s superior cost-sharing subsidies (which reduce out-ofpocket costs) for all incomes.
(4) House’s broader expansion of Medicaid to 150% FPL.
(5) House’s Medicaid primary care payment rate increases.
(6) National Health Insurance Exchange in House bill, or dramatically
stronger minimum standards and federal oversight than in Senate bill
at minimum.
26
Other New Roles, Costs
for State
Roles/Functions
• Possible Administration of Health Insurance Exchange
– Senate: State or NFP must operate by 1/2014, or feds will do it; grant
$$ available
– Likely includes major enrollment/subsidy eligibility function
– HIEs are to be $$ self-sustaining after first year
• Much Greater Role for TDI in Regulation
• Medicaid eligibility system enhancement CRITICAL
– Accommodate both expansion & increased participation
– Smooth interface with HIE system
– HIE may pay state to do income eligibility for subsidies
27
Other New Roles, Costs for State
(cont’d.)
Costs
•
In addition to max. 9% share of Medicaid expansion & (possible)
reimbursement increases from 2015 (H) or 2017 forward (S); and
welcome mat kid costs…
•
Admin costs for state of expanded enrollment presumably @ 50%; financing
of HIE interface costs unclear
•
Increased costs of doing business passed through in Medicaid rates.
Issues
•
Will a Texas Executive opposed to reform implement new state functions
competently?
•
9% share--even offset 9-to-1 with federal funds--must be funded in stated
budget, and in context of a severe structural deficit in our state tax system.
28
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For the most recent information or to sign up for
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© CPPP
Center for Public Policy Priorities
900 Lydia Street
Austin, TX 78702
P 512/320-0222 F 512/320-0227
29
Resource Slides
30
2010-11 Biennial State Budget
$200
All Other 10%
Highways 10%
Prisons 3%
$150
HHS 33%
$100
All Other 9%
Prisons 7%
$50
91%
77%
HHS 27%
Property tax cuts 8%
Higher Ed 16%
Property tax cuts 12%
$0
Higher Ed 13%
Other K-12
28%
General Revenue $80.6 billion
Other K-12
22%
All Funds $182.2 billion
Source: Legislative Budget Board, Fiscal Size Up 2010-11
31
How Would An Income Tax Work?
Net cost to
Texas taxpayers
after lower
property taxes,
federal tax
deduction
changes
$4.6 billion
$2.2 billion
$13.7 billion
Uncle Sam would pick up
10% of the cost of an
income tax through higher
deductions on federal tax
returns
Two-thirds of
income tax
revenue
would be
returned to
taxpayers
through lower
property tax
rates
Total income tax
revenue = $20.5 billion
annually
32
State Tax Collections 2009
Total $37.8 billion
Motor
Vehicle Sales
and Rental
7%
Motor Fuels
8%
Sin
(Cigarette,
Tobacco,
Alcohol)
6%
Franchise
11%
Gas/Oil
Production
6%
Sales
56%
Other
3%
Insurance
3%
Source: Comptroller of Public Accounts, Annual Cash Report.
33
Uninsured Texas Children,
(0-18) 2007-2008
> 400% FPL,
By Family Income
118K
300-400%
FPL, 108K
<100% FPL,
446K
200-300%
FPL, 282K
Total uninsured
children: 1.418
million
100-200%
FPL, 464K
34
US Census, March 2008 & 2009 CPS
Income Caps for Texas Medicaid and CHIP, 2009
250%
200%
150%
$24,264
$33,874/yr $33,874/yr
185%
185% $24,352/yr
$18,310
100%
50%
133%
100%
$36,620
222%
200%
Long
Term
Care
CHIP
$7,884
$2,256
$3,696
12.3% 20.2%
74%
0%
Pregnant Newborns Age 1-5 Age 6-18 TANF Working SSI (aged
Women
parent of Parent of
or
2, no
2
disabled)
income
Mandatory
Optional
Income Limit as Percentage of Federal Poverty Income
Annual Income is for a family of 3,
except Individual Incomes shown for SSI and Long Term Care
35
Texas Medicaid: Who it Helps
October 2009, HHSC data.
Disabled,
359,937
Elderly,
374,395
Poor Parents,
91,838
TANF Parent,
30,758
Children,
1,944,555
Maternity,
96,036
Total enrolled 10/1/2009: 2.97 million
36
Uninsured Texans by Age Group, 2008
65+
57% are
below
200% FPL
~2/3 are
below
200% FPL
0-18
Rate: 20% of 0-18
are uninsured
19-64
Rate: 32% of
19-64 are
Uninsured
Source: U.S. Census
37
Texas Worst Among the States
U.S. average: 15.1%
Massachusetts:
4.1%
Texas:
24.1%
All Ages, 2008
38
Almost All Congressional Districts Worse than U.S. Average
U.S. average: 15.1% — Texas average: 24.1%
% Uninsured (All
Ages) by U.S.
Congressional
District, 2008
District 26
Inset: Dallas/
Fort Worth
District 3
24
32
District 16
Inset: Houston Area
25
20
15
28
7
27
39
Working-Age Texans Are Most Likely to be Uninsured
Millions of Texans
15
32% uninsured
10
19% uninsured
5
3% uninsured
0
Under 19
Job-based coverage
19 to 64
Medicaid
65 and over
Medicare
Uninsured
Source: CPS Annual Social & Econ. Supplement
40
www.census.gov/hhes/www/hlthins/hlthins.html
2 Out of 3 Uninsured Working-Age Texans Have a Job
Uninsured by Labor Force Status, 2007-08 Average
Not in Labor
Force
28%
Unemployed
7%
Employed
65%
Source: CPS Annual Social & Econ. Supplement
41
www.census.gov/hhes/www/hlthins/hlthins.html
Most Uninsured Texans are U.S. Citizens
(6.1 million Uninsured in 2008)
Uninsured by Citizenship Status, 2007-08 Average
Not a U.S.
Citizen 1.6 million (~40%
legal immigrants)
26%
Naturalized
U.S. Citizen
6%
352,000
4.1
million
U.S.-born
citizen
68%
Source: CPS Annual Social & Econ. Supplement
42
www.census.gov/hhes/www/hlthins/hlthins.html