Texas Nursing Home Medicaid

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Perhaps fittingly on April 1, 2011, the Texas House of Representatives gave final approval to two bills that will collectively close a $4 billion deficit in the current two-year budget cycle. This will affect Medicaid and all nursing homes in Texas.

House Bill 4 makes about $1 billion in cuts in the annual budget. Texas House Bill 275 authorizes use of $3.1 billion out of the state's Rainy Day Fund to close the gap. The lower chamber gave its preliminary approval of the bill the day before.

Passage of the bills frees up $4.3 billion to be used in the next budget cycle. But HB 275 still leaves more than $6 billion in the state's economic stabilization or Rainy Day fund, which is expected to have accumulated $9.4 billion by August 2013. Appropriations Chairman Rep. Jim Pitts, the primary author of HB 4 and 275 said not using any of the fund in the next budget cycle, along without raising taxes, was one of the stipulations state leaders set more than a year ago when they started working on a budget they knew would be tight after a serious decline in state revenues during the recession.

The action we took ...
... yesterday freed up $4.3 billion, but this budget does not spend a single dollar of the economic stabilization fund for ongoing programs or services in 2012 or 2013, Pitts said Friday morning in his introduction of the House budget bill.

HB1 assumes passage of both bills, so already includes the $4.3 billion. That amount is distributed among public schools, which will receive $2 billion, the health and human services portion of the budget, which will get $2 billion — $1.8 billion of that will go to the increase in Medicaid caseload — and prisons.

We applied this money to the most pressing and essential needs of our government, Pitts said.

Even with the extra funding, HB 1 still reduces state spending from current levels by 12.3 percent or $23 billion. It costs $164.5 billion and does not include any significant sources of new revenue. It puts funding to public schools $7.8 billion short of what the state is required to give district under current law, cuts total funding to Medicaid by $8 billion — including a 10 percent cut to Medicaid reimbursements to nursing homes — reduces funding to community mental health services by $162 million and drops almost 60,000 college students from the Texas Grant scholarship program.

It is widely acknowledged that the budget — as proposed — will lead to the layoff of thousands of teachers and state employees, as well force the closure of hundreds of the state's 1,054 nursing homes. About 50,000 elderly in nursing homes are receiving Medicaid benefits.

House Bill 1 reflects the money that we have, Pitts said. However, Pitts also promised to continue working on the budget in the conference committee that will work to smooth differences between the House and Senate version of the budget, which at this point is at least $5 billion higher than the House version.

Members, I will promise you today before we bring back a conference committee report on HB1 to you, we will continue to address the problems HB1 has for Texas grants, Medicaid, public education and nursing homes, Pitts said.