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Texas curtailing health costs with own program

CHRIS TOMLINSON | 9/9/2013, 10:15 a.m. | Updated on 9/13/2013, 11:40 a.m.

The Associated Press

AUSTIN – Republican-controlled Texas may be rejecting as much of President Barack Obama’s health care overhaul as possible, but state leaders do agree with him on curtailing rapidly rising costs that are consuming more and more of the state budget.

Texas’ constitutional requirement to balance the budget and the Republican promise not to raise taxes have combined over the last three years to drive lawmakers to adopt policies similar to Obama’s signature health care law, the Affordable Care Act. But it’s more a case of Republicans working in parallel rather than in partnership with Washington.

Since 2011, the Legislature has passed laws to reduce costs in health programs for the poor, disabled, young and elderly. They intend to reward healthy results rather than pay doctors per procedure.

Squeezing out those extra dollars, though, has been tough. Texas is the fifth-lowest state in the nation in per capita spending at $5,924 a year, according to the Kaiser Family Foundation. Even then, Texans spend $146.7 billion dollars a year on health care and costs are rising 7.3 percent a year, above the national average of 6.5 percent.

One way Texas has saved money is by privatizing management of publicly-funded health care programs, such as Medicaid and the Children’s Health Insurance Program.

In 2011, lawmakers required the Department of Health and Human Services to contract with health insurers to enroll and manage spending on children and the poor across the entire state. This year Sen. Jane Nelson, the Republican chairwoman of the Health and Human Services Committee, passed a law that expanded managed care to the disabled and elderly.

By paying private firms a flat fee and allowing them to take care of the needy, Nelson said her bill would save money, improve efficiency and allow 12,000 new people to receive care.

“It will help to ensure we can continue providing quality services to seniors and Texans with disabilities, who are living longer, more productive lives than ever before,” Nelson said. The Texas Department of Health and Human Services reported saving 5 percent on Medicaid in the 2012-2013 budget.

Doctors complain, though, that the savings comes from cutting reimbursement rates, which discourages health care providers from accepting Medicaid patients. The Texas Medical Association also expressed disappointment that Gov. Rick Perry rejected proposals to expand the number of people on Medicaid to include the working poor.

Texas has the highest rate of uninsured in the country at 25 percent, a number that could drop to 9 percent if the state accepted $10 billion over 10 years to expand health care for the poor, according to state officials.

The Texas Hospital Association said it has reduced costs, both under state and federal law, creating new procedures for identifying high-risk patients and preventing complications, said Lance Lunsford, spokesman for the association.

But since the poor and uninsured often rely on expensive emergency room care, Lunsford said hospitals will continue to pass on those costs to the public when those patients don’t pay their bills.

“Bypassing coverage expansion won’t suspend demand, and hospitals are going to be leaned on to provide this care,” he said. “This results in a cost-shift to local taxpayers and the insured through higher local taxes and higher premiums.”

Until Texas finds a way to reduce the number of insured – now about 6 million people – there is a limit to how much costs can be controlled as long as those people rely on emergency rooms and not preventive care for their health, experts agreed.