State official warns of increased Medicaid spending

PLANO -- Texas may find itself in a dire financial situation if changes are not made to the national healthcare act passed in 2010. That was the opinion shared by Texas Comptroller Susan Combs Thursday morning at a town hall meeting in Plano.

Combs, a Republican who was elected to office in 2007 and reelected in 2010, said the decision to open up Medicaid to more Americans was not sustainable, and also shared her thoughts on state education funding during a speech at the Plano Chamber of Commerce.

During her presentation, Combs used pie charts to show how the number of Texans enrolled in Medicaid has spiked in recent years. From 2005-2008, a little less than 3 million Texans were enrolled. However, in 2008, that number began to increase sharply and reached 3.5 million in 2011. Combs said the spike was largely due to the recession, but that if no changes are made at the federal level, that number could reach 6.2 million by 2020 regardless of what the economy does.

With the increase in enrollment, the percentage of Medicaid funding, compared to the total amount of state spending, will potentially increase from 20 percent in 2011 to 37 percent in 2023. In 2001, Medicaid spending comprised only 14 percent of the state budget.

"The federal Medicaid will be taking the oxygen out of the room for other things such as public education, higher education, roads, hospitals and the prison system because it is federally driven," she said. "The solution is to hope that congress rolls back some of those enrollment mandates."

Combs singled out states such as California and Illinois, which she said would potentially buckle under the financial burdens of the new law. She said if no changes are made, Texas will have to find new revenue sources, and government entities will have to find new ways to save money.

While Medicaid spending has increased and is on track to continue its upward path, all other state spending has decreased since 2001. Public education spending, which doesn't include funding for state college and universities, currently comprises 44 percent of the state budget, but could drop to 37 by 2023, Combs said. All other expenditures are expected to drop from 41 percent currently to 25 percent of the state budget by 2023.

With the Texas economy having regained all of the jobs it lost during the recession, Combs said the state would expect to spend less money on Medicaid. However, with the Medicaid enrollment requirements being relaxed, that is unlikely to be the case.

"What you would normally expect is the [Medicaid spending] would level off or drop," Combs said. "If we were not mandated by the [federal government], I would think the 20 percent would shrink. ... I think it could get to the high teens again, since it went up but then it leveled off. If the economy got good, it could drop."

The United States Supreme Court heard arguments earlier this year concerning the healthcare law and a ruling is expected this summer. Still, Combs said she doesn't know if the court will rule on the Medicaid portion of the bill, of if their decision will solely deal with the constitutionality of the individual mandate.

Combs also touched on other areas of state spending, including funding for public schools. After massive cuts were made to public education spending during the 82nd Legislature, Combs said she is not sure what the future holds since multiple lawsuits have been filed concerning the state funding formula. The lawsuits will be heard by the Texas Supreme Court in October, and a ruling should come early next year.

Student enrollment has increased 21 percent statewide since the 1999-2000 school year, Combs said. However, during that same time frame, teacher numbers have increased 26 percent and administrator numbers have increased 32 percent.

While excessive administrative spending may be an issue in parts of the state, Combs said Collin County school districts are a model of efficiency, with nearly all of the districts receiving at least 4.5 out of 5 stars in the 2011 Financial Allocation Study. Plano, McKinney and Frisco received 4.5 stars, while perfect scores were received by Allen, Anna, Celina and Princeton.

"The local community has paid attention to the incremental improvement and you have been rigorous about your spending," Combs said. "I go and do these town halls where everyone is a 2, a 1.5 or a 2.5, and so here you are in Collin County where basically everyone is 4.5 to 5. The point is, it can be done."

With the future of educational spending uncertain, Plano ISD Trustee Missy Bender said something has to be done, before it is too late.

"School districts are reaching the point where you can't just continue to do more with less and say it is always going to work," she said. "At some point you are going to do less with less."

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