Chapter 8: Health and Human Services
Change Medicaid Budgeting
to Increase Accountability
Summary
Spending on Texas’ Medicaid program has increased steadily over the
last 20 years. Because multiple agencies use Medicaid funding for dozens of
programs, policymakers find it difficult to track the overall spending of
Medicaid funds. A consolidated Medicaid budget would allow state leaders to
better assess state and federal spending on these programs to ensure that the
best use is made of every tax dollar.
Background
Public and private health care costs rose rapidly in the 1980s and 1990s.
Medicaid is a joint state-federal health care program that provides medical
services, medicines, and long-term care to low-income Texans. The number of
Texans receiving Medicaid services has risen in the 1990’s, primarily due
to broader eligibility criteria for pregnant women, infants and children, the
elderly, and the disabled.
As a result of broader eligibility and health care inflation, Texas’
Medicaid spending rose by an average 14.3 percent annually from 1988 to 1999,
when spending reached $11 billion. In 2001, Texas Medicaid spending is expected
to reach $12 billion, with the state paying about a third of that amount
(Exhibit 1 and 2).
While Medicaid accounts for a significant part of the state’s budget,
policymakers find it difficult to analyze this spending because it is divided
among a number of state agencies.
The Texas Health and Human Services Commission (HHSC) administers the
state’s Medicaid plan. Because HHSC does not prepare a comprehensive
Medicaid budget, however, Medicaid expenditures are accounted for in separate
agency budgets, making it difficult and time-consuming to obtain total Medicaid
budget and spending figures.
When the Comptroller’s office prepared a recent report on Texas health
care spending, it proved difficult to determine which agency spends what amount
of Medicaid dollars in any given time period. Several categories of spending
overlap and two different agencies sometimes report the same expenditure.
At present, the Department of Human Services reports to the federal
government on Texas’ Medicaid each quarter. This report, however, provides
figures broken down by federal program. To be useful for state legislators, such
information should be broken down by state agency and program. Without such a
breakdown, state lawmakers and the public cannot determine who is responsible
for cost overruns and, therefore, cannot enforce basic financial
accountability.
Recommendations
A. State law should be amended to require the
Health and Human Services Commission (HHSC) to develop a comprehensive Medicaid
budget that captures all Medicaid spending by each state agency and program.
This report should be delivered to each biennial session of the
Legislature.
This budget should identify agency expenditures by program and consolidate
them into a single, easily understood Medicaid budget.
Other state agencies paying for services with Medicaid funds should be
required to cooperate with the preparation of this budget, including the Texas
Department of Health, Texas Department of Human Services, the Texas Department
of Protective and Regulatory Services, the Texas Department of Mental Health and
Mental Retardation, and the Interagency Council on Early Childhood
Intervention.
B. HHSC should report actual Medicaid spending on a
quarterly basis to the Legislature, the Governor, and the Comptroller of Public
Accounts.
This information should be broken down by state agency and program, to ensure
its usefulness as an accountability tool.
Fiscal Impact
The budget and spending reports could be prepared with existing agency
resources.
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