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Regional Analysis
What kind of health care is available, the quality and cost of that care, who provides it, who buys it and how it is purchased varies greatly in a state as large and diverse as Texas. For purposes of economic analysis, the Comptroller’s office has divided the state into 11 regions (Table 3). The health care spending total for these 11 regions is almost $69 billion–less than the statewide total. That is because more than $1 billion cannot be directly identified with any specific region. For example, Medicaid data by county is not available for spending on some forms of managed care, Medicaid payments of Medicare premiums and some Department of Mental Health and Mental Retardation programs.

The spending patterns for health care differ among the Comptroller’s regions. Some differences are related to population distribution. In 1998, almost 70 percent of the state’s 19.7 million people lived in four regions with major metropolitan areas: the Metroplex of Dallas-Fort Worth; Gulf Coast, anchored by Houston; Central Texas with Austin, Waco and Bryan-College Station; and Upper South Texas with San Antonio (Table 2). Some spending patterns in three of these regions–Metroplex, Gulf Coast and Central Texas–tend to differ from those of the Upper South Texas and other regions of the state.

Private sector
Money spent directly in the private sector for health care is one example. Private and public employers, and individuals, spent more than $39 billion, or 57 percent of the total spent for health care statewide. But in the Metroplex, Gulf Coast and Central Texas regions, the percentage of private care purchased was greater than the statewide percentage: 65.0 percent in the Metroplex, 61.5 percent in Central Texas and 59.8 percent in the Gulf Coast region. In each of the other eight regions, spending for private health care was less than the state average. The Upper South Texas region had the lowest private spending at 48.1 percent (Table 3).

Public sector
Spending on public health care programs had a reverse pattern. Spending through government and military programs was 40.7 percent of health care spending statewide. Public spending in the Metroplex, Central Texas and Gulf Coast was less than the statewide percentage. Spending was greater than the state average in the other regions, with Upper South Texas the highest at 50.3 percent (Table 3).

Charity spending

Charity purchasers provided relatively little of the total health care spending, about 1.6 percent of the estimated statewide total or $1 billion. This varied from an estimated high of 2.2 percent in the Gulf Coast and High Plains regions, to a low of 0.9 percent in the Northwest Texas region (Table 3).

Private Purchasing
Direct spending in the private sector includes three categories:

  • employer and individual health insurance,
  • consumer out-of-pocket spending and
  • workers’ compensation.

Employers include both private companies and public agencies. Their spending was estimated because reports of actual expenditures at the county and regional level were not available.

Employer and individual insurance is the largest component of private health care spending, a statewide average of 62.8 percent (Table 4). The Metroplex again came in highest with 65.1 percent, or almost $7 billion of the estimated over $10 billion employers and individuals spent on health care in that region. The lowest private insurance spending was in the regions on the border with Mexico. The two South Texas regions and the Upper Rio Grande region had less than 60 percent. The West Texas region also was lower than the statewide average. The rest of the regions were higher than the state average.

National studies by the Employee Benefits Research Institute indicate the percentage of insurance varies due to a number of factors, especially income levels and the size of the company or agency for which people work. Employees with higher incomes are more likely to choose to pay their part of the premium, if it is required, or to purchase individual policies, if they are not offered by their employer. Large companies often can bargain for better rates. Some assume the risk directly and self insure. Smaller companies may find it more difficult to provide low cost insurance. Full-time, full-year workers are more likely to have insurance. Nationally, certain industries such as government, manufacturing, professional services, transportation, communications and utilities tend to have higher percentages of employees who are insured, while agriculture, personal services and self-employed workers have lower percentages.

Texas mirrors this pattern. Regions with higher average wages seem to have higher levels of insurance spending as a percentage of total health care spending. The Gulf Coast, Metroplex and Central Texas regions had the highest average wages for private employers–$35,857, $35,322 and $30,860 respectively–and the highest share of insurance spending as a percentage of total health care spending (Table 5). Lower South Texas had the next to the lowest average wage ($22,639) and the lowest level of insurance spending as a percent of total health care spending.

The proportion of people working for larger firms does not always correspond to the proportion of insurance health care spending in a region. Central Texas and Gulf Coast tied for second place among the 11 regions in the percentage of firms with more than 100 employees and second and third in insurance spending (Table 5). Yet Upper South Texas had the highest percentage of firms with more than 100 employees but was next to last in percentage of insurance spending. The Metroplex had the highest percentage of insurance spending but ranked fifth in the number of employees in firms with more than 100 employees.

Public Purchasing
Health care spending by government agencies can be divided into six categories: Medicare and Medicaid, the Military, the Veterans Health Administration, other state and federal governments and local governments. Almost exclusively, this data is based on actual expenditures reported by the health care purchasers.

The federal Medicare program spent $12.6 billion in Texas in 1998: more than 45 percent and the largest share of the state’s almost $28 billion in public health care spending (Table 6). Medicare primarily funds hospital and physician services for the elderly and people with disabilities. Medicare paid for a much higher proportion of health care spending in some regions than others.

A higher proportion of the elderly population in a region makes the Medicare program a more significant purchaser of health care. Upper East Texas, Southeast Texas and the High Plains all have high levels of population over 64 years of age and high levels of Medicare spending (Table 7).

Federal and state Medicaid expenditures accounted for almost 32 percent, or $8.8 billion, of public health care spending in Texas. Medicaid purchases health care for the poor, the elderly and people with disabilities. Lower South Texas had the highest percentage of Medicaid spending and Northwest Texas had the lowest (Tables 6 and 8).

Military and veterans facilities also affect spending. The U.S. Department of Defense spent over $700 million on health care in Upper South Texas–almost one fifth of the total public health care spending in that region–because of military facilities in the San Antonio area (Table 6). The Upper Rio Grande, Central Texas and Northwest Texas also had higher than average military spending.

The Department of Veterans Affairs (VA) was 3.9 percent of public health care spending statewide (Table 6). In Central Texas, however, the VA spent 8.3 percent because of the presence of VA hospitals and outpatient services in Williamson, McLennan, Bell and Falls counties.

Spending by other state and federal programs was 10 percent of public health care spending. In the Gulf Coast region, however, spending by other programs totaled 18.1 percent (Table 6). That disparity is primarily due to the concentration of medical facilities in the area: the University of Texas Health Science Center, M.D. Anderson, the Harris County Psychiatric Center in Houston and the University of Texas Medical Branch in Galveston.

Northwest Texas also had a higher percentage of spending by other state and federal programs than statewide and included spending for two Texas Department of Mental Health and Mental Retardation state hospitals, a state school and Texas Department of Criminal Justice spending for prisoners’ health care in facilities in several counties.

Local spending was 4 percent of public health care spending statewide. The Metroplex, Gulf Coast, Upper Rio Grande, and West Texas regions had percentages higher than the statewide percentage (Table 6).

Summary Sheets and Regional Tables

This study has a summary spreadsheet on each source of spending. Regional or county tables that detail spending by specific purchasers are listed on www.window.state.tx.us/specialrpt/hcs/. Some categories of data had to be grouped together for the regional analysis because reporting sources grouped them together.