Dr. Ron Anderson on state Medicaid cuts

Few, if any, know as much about public health care and its cost than Dr. Ron Anderson, the President and CEO at Parkland Health and Hospital System.  Recently, I received the following legislative update from Dr. Anderson.  When Dr. Ron writes, we all should be listening.  Hear him out. 

Last week, the Texas House Appropriations Committee passed House Bill 1, which would drastically slash funding to hospitals and doctors. Similar discussions are happening in Washington about funding cuts as well as changes in health policy to try to deal with deficits and the cost of health care. Yet some of the proposals might not truly save any money, but rather simply shift the chairs around the Titanic.


Medicaid is not the reason for the current structural deficit in Texas. A cut to Medicaid may actually cost three times as much as it saves because Medicaid is a state-federal match program. When we cut a state dollar, we lose additional federal dollars.

The growth in Medicaid relates mostly to increased enrollment during economic downturn. This is exactly how Medicaid was envisioned to work, as a "counter cyclical" safety net. Many of the state dollars that are matched are local tax dollars that hospitals like Parkland send to the state in order to achieve the federal match. Out of $8.6 billion of state match in this last biennium, only $1.7 billion was actually general revenue. In fact, Medicaid local and state dollars were matched with more than $16 billion of federal money which is divided from taxes we Texans pay to Washington. We're simply returning money to Texas to support our neediest residents.

At the same time, Medicaid is already a program that does not pay the full cost of care. Only 38 percent of Texas doctors accept new Medicaid. Many may stop caring for Medicaid patients altogether if there were additional cuts.

In turn, patients go to emergency rooms that are already crowded. These patients may wait to seek care and therefore have a more advanced illness, requiring admission that could have been avoided through early intervention, prevention and primary care. The total cost of health care will go up and many people who are not Medicaid patients will be impacted.

How does this impact Dallas County? While the state might save money, it costs money for the local government, the local health care providers and the local taxpayers. Think of the total burden of illness that must in turn be supported solely by this community. It's simply a cost shift. Consider also that local tax values have declined yearly by 3 to 4 percent for the last four years leaving little ability to absorb these costs.

Texas has been remarkably short sighted in not taking advantage of federal matches. Some of the discussions are about expanding managed care, supposedly saving the state $50 million. On the other hand, it would also minimize the ability to match federal Upper Payment Limit dollars, costing Texas $800 million to $1 billion. If we take away a significant funding opportunity, we need something to replace it.

If we create a ripple effect downstream to local government, then the budget cut doesn't accomplish what was intended. Before we balance the budget on the backs of vulnerable people - the poor, the pregnant, the children and nursing home residents - we ought to take a comprehensive look at solutions, both in terms of state revenue and expenses. Whether it's use of the Rainy Day Fund or program cuts, I don't think there are any simple answers. I'm pleased that members of the North Texas delegation are looking for answers. However, there comes a time when we have to realize that a sacrifice is going to have to be made.

Because of the wonderful Dallas County citizens and their support of the bond campaign, we have money to build a new hospital. That won't be affected. In fact, it better prepares us for the future to stay competitive in the marketplace after health reform.

Yet as we plan the Parkland 2012 budget, we are taking a serious look at savings that make minimal impact on patient care. But we've done that now for the last four years, and as painful as it is, eventually we may have to curtail services.

We must consider the ripple effects of potential "savings" and the burden it creates on others. Parkland has an open door for the vulnerable and needy. We care for those with Medicaid even if the reimbursement is low. However, that means Parkland could also be impaled by volume if the private sector disengages from Medicaid due to cuts. That's a concern that keeps me awake at night. But above all else, we will continue to advocate by putting the patients first.