Letter to Tom Craddick on SB10

May 3, 2007

The Honorable Tom Craddick
Office of the Speaker of the House
P.O. Box 2910
Austin, Texas 78768-2910

Dear Speaker Craddick:

The hospitals of Texas support the state’s interest in making reforms to ensure the long-term viability of the Texas Medicaid program by optimizing federal dollars and creating new strategies to reduce the number of uninsured Texans through Senate Bill 10. Hospitals appreciate their inclusion as key stakeholders in the development of Senate Bill 10, particularly the inclusion of language that addresses hospitals’ concerns with the potential financing mechanisms of the Health Opportunity Pool.

While these Medicaid reforms have the potential of moving the program forward in a positive direction, hospitals want to reiterate that hospital rate restorations are essential parts of this comprehensive legislative reform package. The Texas Health and Human Services Commission has consistently maintained that the state’s Medicaid funding shortfall is a significant barrier to achieving the funding flexibility that will facilitate Medicaid reform. Accordingly, we need your support during the conference committee process on House Bill 1 to ensure that meaningful hospital rate restorations are included in the final budget.

It is also important to ensure that any waiver negotiated as a result of Senate Bill 10 should not jeopardize hospitals’ access to DSH and UPL funds in the future. Hospitals understand that individual facility “hold harmless” provisions are not feasible given the complexity of hospital financing but support statutory provisions that have been included in the bill that protect federal dollars that hospitals now receive to offset their growing losses on Medicaid and uncompensated care and expand access to health care in their communities.

The legislation will make significant changes in the Texas Medicaid program, and over time, will improve access to primary and preventive health care for uninsured and low-income Texans. Hospitals believe it is important that the Health Opportunity Pool be implemented in a studied and deliberate manner. It should be financed first with “new” funds that can be generated through increased state funding or enhanced federal funding for existing state or local expenditures. Existing funding sources should be used only as the goals of the waiver become manifest: more Texans become insured and hospitals’ unreimbursed costs are diminished. Given the complexity and timing of this undertaking, we believe that it is important for the legislation to include an effective legislative oversight process, as proposed in the Senate version of the bill.

Again, Texas hospitals look forward to continuing to support your efforts on Medicaid reform and trust that we will have a continued partnership working with the state as it negotiates with the federal government to develop and implement new programs after the session. Thank you for your leadership on health issues.