Cover Story - May 2010
Prescription for Public Health Disaster: Budget Cuts Will Weaken Already Fragile System
Tex Med. 2010;106(5):14-20.
By Crystal Conde
Free and low-cost health clinics give poor or uninsured patients a safety net, a place they can turn to for routine medical care and disease management. These safety nets may need a life preserver themselves as Texas prepares to contend with a potential budget deficit of at least $11 billion when the legislature meets next January.
At the start of the year, Gov. Rick Perry, Lt. Gov. David Dewhurst, and House Speaker Joe Straus asked the heads of all state agencies to develop plans to trim their current budgets by up to 5 percent. While reductions aren't final and the state's leadership hasn't approved them, the items on the chopping block worry physicians.
Tom McHorse, MD, medical director at Volunteer Healthcare Clinic in Austin, says reduced state funding of public health programs will increase the demand for routine health services at charitable clinics. While he's confident his clinic can care for more patients with routine medical problems, such as high blood pressure and upper respiratory infections, it doesn't have the resources to treat patients with complex medical needs such as diabetics suffering from chronic kidney disease. (See "TMA House Honors Dr. McHorse.")
"Reducing funding for state-supported public health programs is a poor investment," he said. "Medically complex patients with no health care options will seek medical care when they have more advanced disease and thus will face a higher mortality rate."
Volunteer Healthcare Clinic operates on an annual budget of about $300,000, with funding provided by grants from several foundations. Dr. McHorse says in-kind services from health professionals' donated time and skills make up at least 80 percent of the clinic's budget. Medical care is free for patients who live in Travis County, are ineligible for any government-funded health programs, and have incomes less than 200 percent of federal poverty guidelines.
While Health and Human Services Commission (HHSC) Executive Commissioner Tom Suehs publicly stated his intent to protect core public health and community-based mental health services from the cuts, he could not spare all programs to reach the 5-percent reduction target.
Among the proposed budget cuts he submitted to the Legislative Budget Board (LBB) in mid-February, the Texas Department of State Health Services (DSHS) is looking at reducing payments for indigent care provided by The University of Texas Medical Branch at Galveston (UTMB) by more than $7 million, and cutting almost $1.8 million from DSHS regional offices. Also proposed is a temporary hiring freeze that would save about $4.4 million, a $200,000 cut in a diabetes prevention pilot project, a $3.5 million reduction in the Children With Special Health Care Needs Services Program (CSHCN), and delays in implementing new regulatory programs, such as licensing laser hair removal facilities. DSHS bases the UTMB indigent care cut on an assumption that the institution will provide less indigent care during the biennium because of damage from Hurricane Ike.
HHSC also proposed reducing funding for uncompensated trauma care by 10 percent. (Texas Medicine will feature an article about this specific budget reduction proposal in the July issue.)
DSHS alone faces proposed cuts totaling about $100 million in general revenue funds for the 2010-11 biennial budget. The proposal also includes reductions in funds for contract monitoring and technical assistance that would result in the state's losing $55,000 in federal funds in 2011. To view the complete DSHS reduction options document, click here .
David Lakey, MD, DSHS commissioner, says the department realizes the challenges ahead but asserts the potential funding reductions don't change the department's mission.
"Pinpointing reduction options is not easy. We had to make some hard choices. We put everything on the table and then began whittling down, prioritizing based on which reductions would be felt the least by the people who directly rely on us," he said.
He stresses that it's difficult to reduce the budget by $100 million without affecting direct services.
"We are reducing administrative expenses, absorbing what we can, holding off on certain improvements, implementing a hiring freeze, and encouraging those who rely on us for funding to be aware of other funding options that may be available," he said.
Proposed reductions in the budgets of HHSC, DSHS, the Department of Assistive and Rehabilitative Services, the Department of Family and Protective Services, and the Department of Aging and Disability Services would total $278 million if implemented by the LBB.
TMA Council on Public Health Chair Jeffrey Levin, MD, says taking funding away from public health programs and reducing or eliminating services doesn't mean health problems will go away.
"All we're doing is placing a bigger burden on an already fragile system, and it will cost more in the long run," he said.
The Texas Medical Association recognizes lawmakers face tough fiscal decisions to balance the 2011-12 state budget and that reductions in public health funding, if enacted, could be detrimental to Texans' health and cost the state more in the future. That's why TMA and 20 state specialty societies wrote Governor Perry, Lieutenant Governor Dewhurst, and House Speaker Straus in February and asked them to "have a careful and open review of health care spending in order to develop a comprehensive plan that in the end will save the state money" and to defer many of the proposed cuts "until the larger implications can be carefully evaluated and new ideas considered."
TMA President Susan Rudd Bailey, MD, calls on physicians to be a resource for TMA during the 2011 legislative session.
"One of the most effective ways physicians can help is to share stories with legislators about how lack of access has affected their patients and has resulted in increased costs. It helps if physicians are willing to testify. We need voices from every specialty from all over the state to make the case for funding our public health infrastructure," she said.
Sen. Jane Nelson (R-Flower Mound), chair of the Senate Health and Human Services Committee and a member of the Senate Committee on Finance, applauds Texas physicians' efforts to focus the debate on prevention, innovation, and cost effectiveness.
"I encourage physicians to contact their state representatives and senators, especially those who don't serve on health-related committees, to help them understand how the decisions we make affect their patients," Senator Nelson said.
Texans at Risk
Proposed funding reductions in inpatient mental health care, in particular, worry Dr. McHorse, who says he's unaware of any free or low-cost clinics in the state that have the ability to focus on treating patients with severe mental illness.
"In the past year, our clinic has been able to add some limited mental health services to help people with depression and anxiety but not complex mental health illnesses. When public health care services for the mentally ill take a funding hit, it creates a challenge for society. When those patients have nowhere to go, they end up in emergency rooms."
Dr. Levin acknowledges the need for DSHS to consider reducing major expenditures in its budget to achieve a 5-percent cut in funds. While the state does not propose cuts to community-based mental health services, for which the legislature has invested new money over the past few years, he says it's not surprising that mental health hospital beds are part of the proposed budget reductions. Mental health funds are more than half of the DSHS general budget and therefore must be an option for reducing expenses, Dr. Lakey says.
DSHS estimates it will save $27 million from 2010 to 2011 by eliminating 50 beds at each of four hospitals - Rusk State Hospital in East Texas, North Texas State Hospital in Wichita Falls, San Antonio State Hospital, and Terrell State Hospital. The cuts will result in about 1,450 fewer patients treated and in about 420 fewer full-time hospital staff employees over two years.
"The short- and long-term costs of cutting mental health funding will be substantial and will effectively result in cost shifting from perhaps mental health hospitals to the criminal justice side," Dr. Levin said.
Dr. Bailey adds that she fears the cost to society of eliminating mental health beds is "incalculable."
"I think the decrease in bed numbers for the mentally ill will increase the number of homeless mentally ill. It's a real tragedy," she said.
In addition, DSHS proposes reducing funding for children with special health care needs by $3.5 million. The cut could prohibit the agency from removing up to 285 clients from the waiting list in fiscal year 2011.
Since Sept. 1, 2009, DSHS has removed 255 clients from the waiting list. As of Feb. 28, 852 people were on the program's waiting list. The special needs program places clients on a waiting list when a lack of funds prevents it from supporting all individuals who seek health care benefits.
CSHCN serves children with special health care needs and people of any age who have cystic fibrosis. The program assists clients with medical, dental, and mental health care; drugs; insurance premiums; and other needs. Among the eligibility criteria for the program, applicants must live in Texas, have an income at or below 200 percent of the federal poverty level, and have a medical problem expected to last at least 12 months.
"What we're talking about is a fixed amount of pie and how it should be allocated. Physicians in the public health camp realize it's really not a good thing to pull away resources from the state's public health infrastructure," Dr. Levin said.
On top of budget options that place some of Texas' most vulnerable patients at risk, HHSC proposed a reduction in Medicaid and Children's Health Insurance Program (CHIP) physician payment rates of 1 percent for children's services and 2 percent for Medicaid long-term care residential and acute care services for adults. Medicaid HMOs would see an additional $13.6 million reduction. The cuts would not affect Medicaid community care, foster care, or adoption subsidies; the LBB also exempted Medicaid benefits, services, and eligibility workers from the 5-percent reductions. (Read "Pay Cut," April 2010 Texas Medicine. )
Dr. Bailey says lowering physician payments in the Medicaid and CHIP programs decreases access to care.
"The payment cuts under consideration will make the programs that much less attractive for doctors. Taken altogether, it's a prescription for a public health disaster as far as I'm concerned," she said.
She points out that many Texas women and children rely on Medicaid, the primary health coverage for pregnant low-income women who earn less than 185 percent of the federal poverty level. Medicaid pays for 56 percent of all births in Texas, compared with 40 percent nationally. As of January, Medicaid enrollment for pregnant women was 102,156.
Lowering physicians' Medicaid payments has an impact on federal funds the state would be eligible for, as well. According to the Health and Human Services budget reduction options document, the 1-percent reduction in physician payments for children's Medicaid services reduces federal funds in Texas by $89.4 million. The 2-percent decrease in physician payments for adult Medicaid long-term care residential and acute care services would mean a $61.5 million federal funding cut.
"Something Has to Give"
Federal stimulus funding under last year's American Recovery and Reinvestment Act provided DSHS with about $29.3 million. Dr. Lakey says the department had received that amount as of March 9.
DSHS invested about $10.8 million in stimulus funds in the Texas Women, Infants and Children (WIC) program. DSHS uses the money to expand places where the clients can use WIC electronic benefits cards to include farmers markets, pharmacies, and convenience stores. The funding also updates WIC's computer systems and equipment. The department allocated about $19 million toward prevention and wellness efforts such as immunizations, health care-associated infections, obesity, physical activity, nutrition, and tobacco. To track how state agencies are investing stimulus funds, click here .
Unfortunately, the legislature won't have extra stimulus dollars to help bridge the funding gap in 2011.
Funding for Health and Human Services is just shy of $60 billion in the fiscal year 2010-11 Texas budget.
Vince Fonseca, MD, MPH, former state epidemiologist, says even that amount is inadequate for a large state with a highly uninsured population.
America's Health Rankings: A Call to Action for Individuals & Their Communities 2009 Edition reports 25 percent of Texans have no health insurance, the highest rate in the nation. In addition, 23 percent of children younger than 18 live in poverty, and the state spends only $47 per person for public health funding; the national average is $94 per person.
Dr. Fonseca says Texas' population has increased 4 percent since 2008, and he points out inflation increased 2.5 percent from January 2009 to January 2010. He says a minimum 6.6-percent public health funding increase over the 2008 budget is necessary simply to maintain the same level of public health services, given population growth and inflation.
"When you get into this hole, something has to give. If we have to reduce the public health budget, we're going in the wrong direction," he said.
TMA Trustee Lewis Foxhall, MD, associate professor of clinical cancer prevention at The University of Texas M.D. Anderson Cancer Center, says the state's public health system still hasn't recovered from massive restructuring that occurred in 2003. At the time, the legislature, confronting a nearly $10 billion budget deficit, consolidated 12 health and human service agencies into five.
Dr. Foxhall acknowledges that trying to cut an already underfunded system is difficult and that public health funding is particularly susceptible during economic downturns.
"The challenge in public health is that it's at times perceived as concentrating on prevention and surveillance, not on direct medical services. Those sorts of things tend to be valued in our health system less than direct services," he said.
Dr. Foxhall is a member of the DSHS Council, an advisory body that reviews all rules and regulations promulgated by the department. Dr. Foxhall has served on the council since Governor Perry appointed him in 2005. He says the council will provide input on proposed budget reductions when the department submits its legislative appropriations request, which historically occurs in August.
Dr. Foxhall realizes it isn't easy to make a business case for prevention. The return on investment in many preventive services doesn't happen in the short term.
"The value of preventive services is realized over time," he said. "Physicians have to encourage elected leaders to be forward thinking and to be visionaries to some extent in understanding the value of prevention for future populations. That's challenging when our elected officials have to worry about their support in a shorter time frame."
Dr. Lakey says DSHS will continue to focus on prevention programs as a critical component to combating major health concerns like obesity.
"We don't want to save $1 today that will cost us $5 down the road," he said.
Other Funding Options
Dr. Lakey says the state's sheer population size and extensive border with Mexico make it impossible for DSHS to take a one-size-fits-all approach to public health and mental health. DSHS relies heavily on local health departments and regional offices to meet the needs of Texas' diverse population. It also contracts with hundreds of community organizations to provide services throughout the state.
Dr. Fonseca offers some money-generating alternatives to an across-the-board 5-percent funding reduction at state public health agencies. He says the legislature could avoid the cuts by increasing excise taxes on alcohol and fuel, as well as allocating more money from Texas' lawsuit settlement with tobacco companies and revenue from the cigarette tax to fund public health.
Texas has long fallen short of the Centers for Disease Control and Prevention's (CDC's) annual spending target for comprehensive, effective tobacco prevention and cessation programs. Texas ranks 46th nationally for tobacco prevention program funding.
Dr. Fonseca says Texas has made some progress in the fight against tobacco use and lauds the state for increasing the cigarette excise tax from 41 cents to $1.41 per pack in 2007, bringing the price for a pack of cigarettes to $5.29.
Last year, Texas' cigarette and tobacco tax revenue totaled $1.5 billion, according to the Texas Comptroller of Public Accounts. The comptroller's office reports revenue generated from the tobacco tax increase funds public education, property tax relief, and the general revenue for state operations.
The Campaign for Tobacco-Free Kids, a nonprofit organization working to prevent children from smoking, to help smokers quit, and to protect the public from secondhand smoke, estimates Texas will rake in approximately $1.86 billion in total tobacco revenue this year. Yet Texas plans to spend only $13.3 million in state and federal funds on tobacco prevention in fiscal year 2010. CDC recommends Texas spend $266 million to prevent and reduce tobacco use and minimize health-related complications and costs.
Dr. Fonseca says earmarking cigarette tax and tobacco settlement revenue for health-related services, such as funding for uncompensated trauma care and tobacco control programs, is a good way to fund public health and improve Texans' health in the short- and long-term.
"There are ways to generate revenue that have a health benefit and that can be earmarked to pay for health-related services," he said.
Dr. Fonseca adds that reductions in public health funding can have an impact on the state's economic outlook.
"We all want economic development in Texas. To be competitive economically, Texas has to be competitive in terms of healthy, educated workers in an environment that promotes healthy choices," he said. "If our workers are unhealthy and at high risk for chronic disease and health complications, companies won't want to relocate or expand here."
Dr. Fonseca has reason for concern. Obesity is wreaking havoc on Texas' children, the state's future workforce.
Obesity projections presented by Texas State Demographer Karl Eschbach, PhD, at the Partnership for a Healthy Texas Obesity Health Policy Forum in December 2008 associate the state's increase in obesity with population growth and aging, race and ethnic shifts, and lifestyle changes.
Moderate projections estimate the number of obese Texas residents by 2040 will be approximately 14.65 million, or nearly 43 percent of the population. Obesity is weighing on the state's financial well-being, too. Counting Costs and Calories: Measuring the Cost of Obesity to Employers, a 2007 report by the Texas comptroller, estimates obesity cost Texas businesses $3.3 billion in 2005. And, estimates place the state's total obesity-related health care expenditures in the neighborhood of a projected $114 billion. Recently, HHSC estimated the health care costs associated with overweight and obese children in Medicaid may cost the program up to $250 million per year.
Despite the many health and economic challenges Texas is up against, Senator Nelson says she hopes "our economy will bounce back in time to prevent the budget shortfall that is being predicted."
Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by e-mail at Crystal Conde .
Tom McHorse, MD, has been caring for the poor and uninsured of Austin for more than three decades. Because of those efforts, the TMA House of Delegates earlier this month granted him emeritus status in the association for his "exceptional and distinguished service."
Dr. McHorse's record of service to the community began shortly after he opened his gastroenterology practice 35 years ago when he began treating patients in the evenings at the Volunteer Healthcare Clinic. He became the clinic's volunteer medical director in 1994.
As president of the Travis County Medical Society in 2001, Dr. McHorse led the effort to establish the society's Project Access, a coordinated comprehensive system of volunteer health care for low-income, uninsured county residents. Under his leadership as its Executive Committee chair, Project Access has built a network of more than 1,000 volunteer physicians, hospitals, and ancillary health services that has provided more than $15.2 million in donated medical services and $632,000 in free medications to patients.
Because of this and other humanitarian work, including medical missions to Honduras and Nicaragua, Dr. McHorse received the Jordan Award from the Austin Community Foundation in 2000, the Sister Mary Rose McPhee Seton Cove Spirituality Award in 2004, and the Travis County Medical Society's Physician of the Year Award in 2005.