What does the future hold for medicine in Texas? 
Only time — and the actions  of the 78th Legislature — will tell.

by Tom Banning and Jonathan Nelson

Imagine a crumbling health care system, an exploding population of uninsured people, forcing increased demands on government health programs — Medicaid, Medicare and CHIP. Imagine states and employers hemorrhaging money as the cost of providing health insurance increases dramatically, and physicians buried in a morass of running a practice with costs spiraling out of control and reimbursement levels flat-lined or decreasing, leaving physicians unable to focus on healing their patients. Imagine a reality where older, poorer, sicker patients are stranded, unable to receive needed care in a timely, efficient manner. Ultimately, the system collapses on itself.

 

In 1932, Aldous Huxley published his novel, “Brave New World,” a fictional tale of the future that shed a blazing critical light on the present. Are the frightening circumstances described above the future of American health care? Let’s hope not.  Sadly, however, they do mirror our current state of affairs. Welcome to our brave new world.

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Texas’ health care delivery system is at a critical juncture. Several trends have converged to create a system that’s out of control for both patients and physicians.

 

Combine soaring administrative costs of running a practice, including unsustainable increases in professional liability insurance coverage with the cat-and-mouse games of the slow pay, low pay, no pay tactics employed by third party payers, and you’ve got a small business nightmare. On top of that, the state faces burgeoning Medicaid, Medicare, and CHIP enrollments within a bare-bones system that doesn’t cover the cost of delivering care and that can no longer sustain itself.

 

Any one of these factors makes the practice of medicine difficult, but the combination is simply too much to bear. What does this all mean?  It’s simple.  The number of patients needing care continues to increase within a system that does not adequately pay the costs of delivering that care.  A collision of forces is working against the people of Texas to limit access to basic, primary health care.

 

But there are chapters left to be written in our brave new world and the next one begins with the opening of the 78th Texas Legislature on Jan. 14. For the first time since Reconstruction, Republicans have won the offices of governor and lieutenant governor, majorities in both the House and the Senate and all the major leadership positions. Political analyst and editor of The Quorum Report, Harvey Kronberg, says this change signals a possible shift in focus away from rural, border and inner city issues and toward suburban issues. “The suburbs are where the votes are for the Republicans.”

With a projected $5 to $12 billion budget shortfall for 2003, Kronberg says the key words for this Legislature are “budget meltdown.” Legislators will be faced with the dilemma of choosing between the lesser of two evils — to either cut spending or find new revenue — but newly elected Republicans are unlikely to raise taxes. Many of them were elected at least in part on the promise to reform the Robin Hood plan, by which the state funds education through property taxes.

 

“[Republicans] surprised everybody with their ability to turn out voters in this last election and if they can’t deliver on property tax relief and relief from Robin Hood, they may watch that support begin to erode, even with the presidential [election] year coming up,” Kronberg says.

 

This scenario doesn’t sound promising with regard to health issues requiring more spending, especially since Medicaid and CHIP are widely believed to be the largest drivers of state budget shortfalls. “The Health and Human Services budget exceeded education in the last session in terms of state expenditures. I doubt we’ll see that replicated.”

 

Does this mean cuts in Medicaid reimbursement? “I think pretty much everything is on the table in that regard,” Kronberg says.

 

The Legislature is more likely to heed physician requests that don’t require state dollars like tort reform and prompt pay, which Kronberg says should be “slam dunks” for health professionals.

 

In mid-December, Gov. Perry declared medical malpractice reform “an emergency issue” for the new Legislature, citing frivolous lawsuits and escalating damage awards as the problem’s leading factors.

 

According to Kronberg, some kind of tort reform is almost certain in this session. “I think the governor’s calculation was that he would really tick the docs off on the veto of prompt pay but he would win them back on med mal (medical malpractice insurance reform). That was a calculation that took place even as they were considering the veto of the prompt pay bill,” Kronberg says.

 

This time around, the outlook for a prompt pay bill is more positive, “if for no other reason than everybody is sick of it and wants to get it finished,” he says, “and it doesn’t require money from the state.”

 

There has been some talk about creating new revenue by expanding the franchise tax, but Kronberg is doubtful. “To get there you have to revoke the constitutional prohibition on personal income tax and that’s about as likely in this Republican administration as opening a colony on the moon next week.” However, raising professional fees is another matter, and many experts believe physicians could see increases in this area.

 

Two state senators in the new Legislature are physicians: Bob Deuell, a family physician from Greenville, and Kyle Janek an anesthesiologist from Houston who is moving over from the House of Representatives. Both are Republicans and Kronberg says the two will be in critical positions for health care issues since the Senate will be under new leadership as Lieutenant Gov. David Dewhurst takes office.

In the House, Rep. Tom Craddick from Midland will take the reigns as Speaker of the House. Other legislators to watch on health issues will be Talmadge Heflin (R-Houston) and Arlene Wohlgemuth (R-Burleson). Rep. Heflin will likely head the appropriations committee, and according to Kronberg, Wohlgemuth has positioned herself to be an important player in health care legislation. “Arlene, two sessions ago, started to realize that health costs were going to be the drivers and when Republicans took the majority, if they couldn’t get health costs under control, they were going to relinquish their political capital pretty quickly.” He says she has focused on public health issues, that she’s free-market-oriented and that she’s the most likely chairman of the House Committee on Public Health. “She’s probably going to be a lynch pin on most issues physicians care about.”

 

TAFP is optimistic that the Legislature will address problems facing patients and physicians, which threaten access to care for Texas citizens. Here’s a rundown of TAFP’s legislative agenda.

 

Liability reform: After a brief hiatus, physicians are experiencing unprecedented and economically unsustainable increases in their medical liability premiums. Liability reform will move on three tracks. The first will focus on the adequacy and enforcement of tort laws. Specific reforms that have been identified include a $250,000 cap on non-economic damages, collateral source rule, periodic payments, and greater enforcement of the cost bond and expert witness reports, to name a few.

 

The other two tracks will focus on oversight of insurance underwriting and claims practices, and reducing medical errors while assessing the adequacy of professional discipline and oversight by the State Board of Medical Examiners.

 

Managed care reform: After substantial legislative progress in setting legal standards for patient rights in managed care settings, much legislative action is still required to restore some balance and fairness to the operational business activities of the commercial plans. TAFP will focus its efforts on three key areas of insurance reform: prompt payment, standard contracts, and antitrust reform to permit joint negotiations.

 

Medicaid: For the past decade, the Texas Legislature has implemented a number of sweeping changes to the state Medicaid program, including implementing Medicaid managed care, increasing fraud and abuse detection and prevention programs, and most recently, it enumerated $205 million in cost-saving initiatives to make the program more efficient. In 2001, the Legislature also enacted its largest Medicaid reimbursement update, targeting new funds to primary care physicians. The goal of each reform initiative has been the same: to reduce or contain costs while improving access to care and ensuring a stable provider base.

 

Despite provider increases in 2001, Medicaid reimbursement still lags far behind Medicare and commercial payments. With the downturn in the economy, more people are accessing the Medicaid and CHIP programs, adding stress not only to the state budget, but physicians’ ability to care for these patients. TAFP will strongly advocate for an increase in Medicaid provider rates to help ensure a healthy provider base. TAFP will also fight to streamline and simplify the Medicaid program to remove some of its administrative complexity.

 

Immunizations: Texas ranked last in the 2000 National Immunization Survey, an ongoing study by the National Immunization Program at the Centers for Disease Control and Prevention, which examines vaccination levels for children 19 through 35 months of age. TAFP will support efforts to educate the public on the importance of a proper vaccination regimen. The academy will try to strengthen the Vaccine for Children program through physician education and improved vaccine distribution.

 

The academy will also support legislation to improve the state’s vaccination registry, ImmTrac, which is currently an opt-in system. TAFP along with the Texas Pediatric Society, Texas Medical Association and the Texas Academy of Internal Medicine will pursue changing the registry to an opt-out system, where vaccination data for each child goes into the database except when parents request their children’s information not be listed.

Taxes: In 1991 and again in 1997, the Legislature contemplated a massive restructuring of Texas business taxes by removing or modifying the local property tax and offsetting those revenues by extending the corporate franchise tax to partnerships and sole proprietorships.

 

Given the expected budget shortfall, restructuring the tax code will be debated. TAFP will argue that health care services are profoundly different from most other profitable services, since they are third-party financed, price inelastic, and non-substitutable. Physicians cannot by law or public policy pass along tax increases as a cost of doing business. Moreover, consumers do not purchase illness or injuries, and physicians, under penalty of law or legal and ethical obligation, cannot refuse treatment for a patient in cases of emergency.

 

New district borders, many new faces and new leadership in both houses make this session a challenging one, to say the least. But with one in five Texans having no health insurance, two million Texans enrolled in Medicaid and physicians dropping services, retiring early and closing practices because they can’t make ends meet, the challenges facing legislators are much greater than running the government.

 

The ultimate question facing Texas, its government and its people is who will care for our communities when the intricacies of business drive physicians from being able to practice medicine. Without immediate corrective action in the next legislative session on a number of fronts, this crisis will only deepen in the months and years ahead, leading us to a bleak and uncertain future.

 

As long as we’re imagining our future, picture this: a health care safety net strong enough to keep the least fortunate from fearing illness and broad enough to provide preventive care instead of requiring emergency care. A physician workforce that is free to focus its energies on the practice of medicine instead of the business of running a practice. Paradise or purgatory, health care decisions made by legislators this session could go a long way toward shaping our brave new world.