A Change of Season – And So Much More

Apr 14, 2015, 08:48 AM by Melissa Harman

For the 84th Session, January and February were spent congratulating other legislators; introducing constituents, friends, clubs and organizations visiting “your Capitol”; jockeying for committee appointments; and the usual meets, greets and speeches. Lots of fanfare and love during those first two months!

March is supposedly the windy month or so my Mama said—and it was! The winds of change blew gale force through the Capitol as subcommittees and committees were appointed, with lots of new faces and the work of formulating a budget taking place against a backdrop of continuing accolades on the House and Senate floors each day for visiting groups from back home and special delegations from everywhere. The Capitol was teeming with people like an ant hill preparing for its queen. Committee members arrived early and worked until late at night, building a budget in each house. Overall, they did a pretty darn good job with the instructions provided by leadership.

As discussed in the last Ben’s Blog, the House and Senate have done their jobs to create a suitable budget. So what could go wrong?

Well, is the glass half empty or half full? Depends upon your viewpoint, doesn’t it?

Some will likely say that there is not enough money to fund the proposed budget, even though the budget is $2 billion below the state’s spending cap and it would leave $21 billion left in unexpended funds and the Rainy Day Fund. Some will gaze into a crystal ball, note that oil prices have decreased, and brace themselves for a “worst case” scenario. They will desire to preserve fiscal resources and at the same time push for increased tax cuts, especially on businesses (a Franchise Tax reduction) and personal property (which could total as much as $250 a year for the average homeowner). Budget cuts and tax cuts will be touted as necessary to stimulate an anticipated sluggish economy.

Still others will cite the dynamic Texas economy that not only survived the national recession but THRIVED in spite of it. They will note the marked increase in jobs in Texas and the increased number of taxpaying residents in the state. They will note that expanding populations must have more in the way of state services, especially public and higher education, transportation, public safety, access to health care, and all the other government-related services that go along with that thriving economy. They will see the glass is “half full” and needing to be topped off with additional resources that ensure the continued success of Texas and Texans.

One group sees opportunity and welcomes change; the other sees threats on the horizon and seeks to preserve the status quo. It is from these ends of the spectrum that our Legislature must negotiate a final budget in a conference committee composed of members from the House and Senate.

I’ll write more about that process in a future post, but in general, the conference committee must take into account a number of critical needs as they negotiate the state’s final budget for FY2016 and FY2017. Among the issues our Legislature must consider:

Increasing Cost of Health Care—The marked increase in the cost of health care is not a pretty picture, any way you view it. More and more hospitals are facing closure. Although that has been especially true for small rural and community hospitals, many of the larger urban safety-net hospitals are now dealing with severe shortages in revenues. Why?

Patients who were able to purchase health insurance through the federal Affordable Care Act (ACA) are availing themselves of nearby for-profit hospitals. Since Texas elected not to expand Medicaid, the safety net hospitals are still the primary source of care for the uninsured. And that is something that Texas still has in abundance. The demand there has outstripped the ability of the usual array of safety net hospitals to meet the needs of their patients. Both Harris Health (the Harris County Hospital District) and Parkland Hospital just posted the poorest financial performances they have experienced in years.

Just how bad is it? There is talk of downgrading Ben Taub’s Level 1 Trauma Center to a Level 3 facility, because they do not have the space and/or physician support to continue to be a full-service Level 1 Trauma Center.

Such a change would have a huge, negative impact on the Southeast Texas region. We currently have three trauma centers, two available by air ambulance. If the third (Ben Taub) closes, then that leaves only Memorial Hermann in Houston and UTMB on the island to cover the needs of more than 7 million people in an 18-county area. A downgrade in Ben Taub’s trauma center status could trigger a true medical emergency in the area. Sheer growth of population is already stressing trauma services. Without adequate access to Level 1 Trauma Services, major businesses will not relocate here, in turn stressing the economy of the whole region.

Increasing Cost of Health Care in Prisons—The state’s prison health care costs continue to go up every year in spite of both UTMB and Texas Tech health care providers using all the right tools—such as electronic health records, special pharmacy pricing, pharmaceutical reclamation programs, best-practice treatment protocols, strict utilization review, creative staffing, Six Sigma and other programs to ensure maximum efficiency. The fact is that the prison population is static but the number of offenders older than 55 years is increasing at rate of more than 10 percent every year. With the graying of the prison population come all of the diseases that accompany aging, such as diabetes, heart disease, lung disease, psychiatric illness, and cancer. And roughly 28 percent of the overall prison population has hepatitis C associated with past substance abuse. Providing a constitutionally appropriate level of care for patients with these costly chronic illnesses will become more challenging over time.

State retiree health care costs—As retired state employees enrolled in TRS and ERS live longer, they will consume greater amounts of health care resources. It will take at least $850 million to make the TRS fund “whole” and another similar amount to address ERS.

Transportation—Another major expense item facing the state is the diverse transportation needs driven by the thriving Texas economy. There is always a price to pay for success, and the roads, rails and ports that support Texas are all crying out for a piece of the financial pie! Harvesting Texas’ oil has proven to add to the wear and tear on Texas highways. Have you been on south I-35 to Laredo recently? One pothole leads to another bigger pothole. The same can be said for I-20 and I-10, and even the smaller Farm-to-Market roads from the 1960s are worn. Who knows when I-45 South from Houston to Galveston will ever be finished? The price for these major and evolving infrastructure needs is not small—a minimum of $5 billion and perhaps as much as $10 billion.

And lastly, EDUCATION—There seems little doubt that the issue of public school financing is far from resolved. The House has placed almost $3 billion into the budget in their effort to stave off future lawsuits on school finance. The irony of the present lawsuit is that many of the plaintiffs who found fault with the prior funding scheme have now become “wealthy” districts because of the oil and gas revenues being recovered in their tax districts. For this reason, their case may no longer have merit based on inadequate funding. It is anyone’s guess as to how the Supreme Court of Texas will rule on the school funding issue, but that decision will affect every man, woman and child throughout the state.

Higher education is still reeling from the devastating reductions in formula funding imposed on them in 2001. It has been a decade and a half and higher education is still feeling the impact of inadequate funding, including higher tuition for students (which amounts to a tax on students and parents); the financial freezing out of thousands of students who desire a college education but lack financial resources; and ultimately educational programming that fails to meet national and international standards, especially in the sciences, engineering, mathematics and technology.

For nearly a decade, universities have not enjoyed state support for the construction of new facilities, while student populations have doubled or tripled in many cases. I have been asked if we are using UTMB facilities to our maximum ability (like at night and on weekends). I reply “yes” and assure any doubters that seeing is believing. Resources to build new facilities on our university campus are a must this session, and failure to respond to the growing demand puts our historic education mission at risk. When I am asked if we are using technology, I reply “Yes.” But there is a limit to how many courses one can take online and still get a high-quality education in the health sciences. Some things are better learned in person. Organic chemistry lab at home in the kitchen usually does not turn out well!

For UTMB and our fellow academic medical centers, the “higher education” issue extends beyond graduation. Every city now wants its own medical school. Texas is a great and geographically diverse state, and it is good that we produce an adequate supply of physicians and other health care professionals. But the lack of graduate medical education (GME) programs means that many of the students we educate at Texas taxpayer expense have to seek GME opportunities in other states. About half of those Texas medical school graduates who leave the state for residency training will never return home to Texas to practice, whereas most of those who stay in Texas for their GME training end up practicing here. It is a pretty simple value proposition! If a state is going to retain the medical school graduates it has invested in already, it must provide an abundance of diverse GME slots to attract those students. The $60 million designated for additional GME funding is a great start, but it is a drop of water in a five-gallon bucket that clearly needs additional contributions.

As a leader in this nation, Texas must take an aggressive role in addressing the key success factors to ensure that it remains an economically attractive place for families to live and work. That means that we have to settle for nothing less than excellence in public education and that the higher education road is paved with a solid foundation to attract external students. Our health care system must be the best value in the nation, meaning that quality is high and cost is low. All of our citizens must enjoy access to health care if we are going to interrupt the cycles of costly chronic illness. We must be able to traverse our state safely and efficiently using air, rail and roadways. Our cities and neighborhoods must be safe and well-planned to support families from all walks of life.

How we spend our state’s resources is a real reflection of our state’s priorities. We must hold ourselves accountable for the right outcomes in our strategic budget planning. In Texas, we only get 140 days every two years to make these decisions. We need to get them right.