RAND Study Shows Reform Law's Effect on Coverage, Costs in Texas, Other States

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AUSTIN, Texas--Once the federal health reform law takes full effect in 2016, the number of insured Texans will increase from 72 percent to 94 percent, covering an additional 5 million people, according to an April 5 RAND Corp. study that looked at the effect of the law on five states.

All five states in the study--California, Connecticut, Illinois, Montana, and Texas--will see an increase in insured population, with California going from 80 percent insured to 96 percent (6 million new insureds), Connecticut from 89 percent to 95 percent (170,000), Illinois from 89 percent to 97 percent (1.3 million), and Montana from 82 percent to 97 percent (125,000).

Changes in State Spending.

But only Connecticut will see a drop in state government spending on health care, because it will be able to move some people currently covered under a state insurance plan to Medicaid. The cost of newly eligible Medicaid enrollees will be heavily subsidized by the federal government under the Patient Protection and Affordable Care Act.

Texas will see an increase in state health care spending of $600 million annually by 2016 and $2.5 billion by 2020, while California will see a $2 billion increase by 2016 and a $4 billion increase by 2020, according to the study. Illinois's increase is $700 million by 2016 and $1.3 billion by 2020, while Montana--the state with the smallest population of the five states--will see an annual increase of $10 million by 2016 and $40 million by 2020.

All five states will see large increases in the percentage of people covered by Medicaid, with Texas experiencing the largest--an 80 percent increase by 2016. California will see an increase of 58 percent, Montana 51 percent, Illinois 49 percent, and Connecticut 31 percent.

Texas Comptroller's Report.

Meanwhile, Texas Comptroller Susan Combs (R) April 6 issued a comprehensive look at the increased cost of health care in the state, examining not only Medicaid, but also the cost of hospital services to indigent persons, prison health care, and insurance coverage for state employees. The report includes a number of suggestions for managing costs, including increased use of health maintenance organizations in providing Medicaid, a statewide ban on smoking in public places, increased charges to those who smoke, and releasing elderly prisoners early to reduce the cost of providing health care in prison.

The report also discusses the problem of a lack of access to health care in rural areas. In rural areas, Texas has 1,910 patients per primary care doctor, and in counties along the border, the figure jumps to 2,039 patients per doctor. In contrast, in urban areas the figure is 1,431 people for each primary care doctor.

Seventy-four percent of Texas counties, containing 29 percent of the state's population, had a significant shortage of mental health professionals as well.

Texas spent about $11.6 billion from general revenue funds on health care in Fiscal Year 2009. While that figure represented a drop from $12 billion in FY 2008, the difference was created primarily by one-time federal funds.

Effect on Texas Medicaid Spending.

Medicaid spending amounted to $7.6 billion of general revenue, and total state Medicaid spending, including federal contributions, amounted to $23.3 billion. According to the Texas comptroller's report, the largest driver increasing Medicaid spending was increased enrollment, and the largest percentage of Medicaid funds (58 percent) are spent on services to the elderly and disabled.

Children represent 53 percent of all Medicaid beneficiaries in Texas, but only 29 percent of the money spent through the program. The state Health and Human Services Commission, which administers Medicaid and related programs, saw an increase in health care spending of 46 percent between 2006 and 2009.

Uncompensated acute-care hospital services for the uninsured in Texas cost $460 per resident in 2006, while the national average is $287 per resident.

The increase in the number of people with mental illness sent to prison is one of the causes of the increase in prison health costs. The report shows the 9,200 prisoners suffer from severe mental illness, and that the percentage of prisoners with mental illness increased from 10.4 percent to 12.9 percent between 2002 and 2009.

The percentage of prisoners older than 50 also increased by 38 percent between 2004 and 2009.

By Nancy J. Moore

The RAND study is available at http://www.rand.org/content/dam/rand/pubs/research_briefs/2011/RAND_RB9589.pdf.

The Texas comptroller's study is at http://www.window.state.tx.us/specialrpt/healthcare/pdf/HealthcareReport.pdf.

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