Medicaid and the State Budget: Mortal Injury?

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Anne Dunkelberg /(512) 320-0222 x 102

March 9, 2011

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House Bill (HB) 1 and Senate Bill (SB) 1 under consideration today fall short of continuing all state services by at least $27 billion in state General Revenue (GR). The Legislative Budget Board (LBB) estimates Medicaid alone is short $7.6 billion GR—$18 billion including the loss of federal-matching funds. This under-funding would be more than seven times the depth of the disastrous 2003 Medicaid and Children’s Health Insurance Program (CHIP) cuts.

The $950 million GR reduction for 2004-05 reduced actual state spending on health care services by 9 percent, whereas a $7.6 billion GR reduction for 2012-13 would reduce projected Medicaid spending on health care by about 34 percent.

This Policy Page provides: (1) an overview of the proposed Medicaid funding cuts across the health and human services agencies, (2) details on what cuts are allowed or prohibited under federal Medicaid law, and (3) a discussion of how the proposed cuts might affect Texas’ compliance with the terms of the Frew federal class-action lawsuit settlement related to children’s access to care in Texas Medicaid.