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Texas Estimated Health Care Spending on the Uninsured

On December 16, 1999, the Comptroller’s Office testified before the Blue Ribbon Task Force on the Uninsured on Texas total health care spending. Senator Harris, chair of the Task Force, subsequently asked the Comptroller’s office to estimate the total cost of health care spending for uninsured Texans. The Comptroller’s office estimates that $4.7 billion was spent for this purpose in fiscal 1998.

This snapshot estimate includes an estimated $3.5 billion funded by local governments, private providers, and charities; $989 million funded by state agencies; and $198 million in aid received from the federal government. Table 1 breaks down the total by category and method of finance (local, state, or federal).

Given the nature of health care programs, it often proves impossible to establish whether a program provides services for persons who have no insurance at all or for persons who are uninsured for a particular service.

Categories of Spending
According to a Texas Department of Health (TDH) survey, hospitals spent more than $2.1 billion, or 46 percent of the total, on uninsured and unreimbursed Medicaid services in fiscal 1998.

This figure includes spending by hospital districts and other local hospitals, Texas Department of Mental Health and Mental Retardation (MHMR) hospitals, Texas state university teaching hospitals, and TDH hospitals. These data come from a TDH survey of hospitals that serve Medicaid inpatients. TDH calculates the cost of treating the uninsured and unreimbursed Medicaid cases in Texas hospitals every year.

TDH adjusts these figures for inflation and to reflect hospital costs rather than charges. Costs represent the actual cost of providing health care services; charges are the amounts providers bill to patients or insurers. These adjustments are part of the process TDH uses to allocate Medicaid disproportionate share payments to hospitals.

The Medicaid disproportionate share program reimburses hospitals that spend a disproportionate share of their funds on indigent health care. Texas hospitals received more than $1.5 billion in state and federal Medicaid disproportionate share reimbursements in fiscal 1998, and can use this money for a variety of purposes.

Physicians provided an estimated $914 million, or 19 percent, of all charity care delivered in fiscal 1998. This information is based on a 1997 survey of physicians performed by the Texas Medical Association and MVA Research, Inc.

MHMR community centers spent about $410 million or 9 percent on services to Texans in fiscal 1998 that were not reimbursed by any other payor, such as Medicare, Medicaid, private insurance, or patient funds. This figure is based on MHMR budget data.

University medical school physicians provide health care services in both inpatient and outpatient settings, allowing students and residents working with faculty physicians to receive hands-on training in the medical arts. These university physician practice plans provided at least $319 million (7 percent of the total in fiscal 1998) in funds that were not reimbursed by any other payor.

TDH provided funding for a variety of health care programs other than Medicaid, including Maternal and Child Block Grant programs, immunizations aid, and others primarily intended for low-income Texans. TDH funded about $281 million in these programs in 1998, or 5 percent of the total.

A variety of other charity care accounted for an additional $167 million, or 4 percent of the total. Texas hospitals received charity donations they reported in another TDH annual hospital survey for 1998; other charity care was provided by two Shriners hospitals and the United Way. In addition, some pharmaceutical companies reported spending on their own patient assistance programs.

The U.S. Department of Health and Human Services provides funding through the Health Resources and Services Administration and Indian Health Services for programs in local communities. In all, these programs provided an estimated $116 million, or 2 percent of the total.

Some Texas school districts purchase health care services for their students and related health care expenses not funded by other sources. The Texas Education Agency reports that school districts spent $160 million (3 percent of the total) on unreimbursed health care services in fiscal 1998.

Local health agencies provide a variety of public health and health care services in their communities. These agencies spent an estimated $109 million, or 2 percent of the total, on unreimbursed health care in fiscal 1998.

The Texas Department of Human Services (DHS) spent about $90 million (2 percent of the total) on long-term community care services for the elderly and persons with disabilities that were not funded by Medicaid, Medicare or other third party payors.

Counties that do not have hospital districts are required to report their medical expenditures as part of the state’s County Indigent Health Care Program. In fiscal 1998, Texas counties in this program reported spending $39 million, or about 1 percent of the total.

The Texas Alcohol and Drug Abuse Commission spent an estimated $10 million (below 1 percent of the total) on methadone treatment and detoxification that was not reimbursed from other sources.

Figure 1
Estimated Texas
Health Care Spending on the Uninsured
FY 1998
Spending Estimate Graph Spending

Variance from Previous Estimates

This estimate exceeds the estimate of $3.4 billion in uncompensated care in 1995 produced by the House Committee on County Affairs in 1998. The major reason for this variance is that the Comptroller’s estimate includes $1.2 billion in charitable care from physicians and physician practice plans, as well as a more comprehensive identification of other sources of spending.
Per Capita Spending
The Census Bureau estimates about 4,880,000 Texans were uninsured in 1998, producing an estimate of almost $1,000 in per capita spending for the year.
Regional and Population Variances
It should be noted that Texas’ health care spending on the uninsured is not distributed equally by population or geography. Obviously, some healthy uninsured Texans received no medical services in 1998, while a patient in a state hospital bed for a month used about $7,732 in services. Similarly, some Texas communities may spend more in federal, state, and local funds on health care for the uninsured than others, depending on the health care facilities in their area and the characteristics of their uninsured populations.
Uninsured versus Total Health Care Spending
The Comptroller’s office is producing another study of total health care spending in Texas and estimates this spending totaled more than $70 billion in fiscal 1998. This study was requested by the Texas Institute for Health Policy Research, to facilitate their work with state and local community leaders on topics related to health care spending.

The total health care spending study lists unduplicated spending by purchaser. For example, it identifies the total amount spent by the state and federal government on Texas’ Medicaid program and then eliminates Medicaid reimbursements from subsequently reported spending by state agencies such as MHMR. This ensures that each dollar is counted only once and that unreimbursed spending by each purchaser can be identified.

The present estimate, focusing on spending for the uninsured, involved a review of each spending category that selected the subset of programs addressing low-income persons and others most likely to be uninsured. It relies on unduplicated spending that has not been reimbursed from other programs, such as Medicaid, Medicare, and other insurers.

The uninsured study relies on one source of information not used in the total spending estimate, TDH’s survey of spending on uninsured and unreimbursed Medicaid cases. This is a more direct measure of spending for the uninsured. In the overall spending study, this amount is addressed primarily under Medicaid disproportionate share reimbursements to hospitals; state spending on MHMR services, TDH and university hospitals; and hospital district taxes and other local tax spending on hospitals.

Table 1
Texas Health Care Spending on the Uninsured
FY1998
      Method of Financing
    Total
Cost
Local (8) State Federal
Hospitals (1)          
  Hospital Districts and other Local Hospitals $ 1,637,327,000 $ 1,637,327,000 $ - $ -
  Texas Mental Health and Mental Retardation Hospitals $ 281,455,000 $ - $ 281,455,000 $ -
  Texas University State Teaching Hospitals $ 203,664,000 $ - $ 203,664,000 $ -
  Texas Department of Health Hospitals $ 19,622,000 $ - $ 19,622,000 $ -
  Total $ 2,142,068,000 $ 1,637,327,000 $ 504,741,000 $ -
Physician Charity Care (2) $ 914,063,000 $ 914,063,000 $ - $ -
Texas Mental Health and Mental Retardation Community Centers (3) $ 410,241,000 $ 72,467,000 $ 318,119,000 $ 19,655,000
University Physician Practice Plans (4) $ 319,175,000 $ 319,175,000    
Selected Texas Department of Health programs (5) $ 240,852,000   $ 142,141,000 $ 98,711,000
Other Charitable Donations (6) $ 166,845,000 $ 166,845,000 $ - $ -
School District Health Expenditures $ 160,180,000 $ 160,180,000 $ - $ -
U.S. Health and Human Services Agencies (7) $ 116,881,000 $ 116,881,000    
Local Health Agencies $ 108,550,000 $ 108,550,000 $ - $ -
DHS Non-Medicaid Long Term Community Care $ 90,373,000 $ - $ 19,977,000 $ 70,396,000
County Indigent Health Care Program $ 38,908,000 $ 36,315,000 $ 2,593,000 $ -
Texas Alcohol and Drug Commission $ 9,945,000 $ - $ 995,000 $ 8,950,000
Total $ 4,718,081,000 $ 3,531,803,000 $ 988,566,000 $ 197,712,000
 
Notes:

  1. From the Texas Department of Health Disproportionate Share Hospital Program Survey.
  2. Estimated from data from a 1997 survey by the Texas Medical Association.
  3. Includes spending by MHMR State Operated Community Centers.
  4. University physician practice plan care not reimbursed from other sources, like Medicare, Medicaid, and private insurance.
  5. These include Maternal and Child Health Care, HIV, and other programs identified as health care programs by a 1997 Sunset Commission report and that serve primarily low income Texans. It does not include Medicaid.
  6. Includes charitable donations to hospitals reported in Texas Department of Health 1998 annual hospital survey, spending by two Shriner's hospitals, estimated health care spending by the United Way, and patient assistant programs by several pharmaceutical companies.
  7. These include Health Resources and Services Administration (HRSA) and Indian Health Services (HIS) for programs in local communities.
  8. Local includes not only local governments but charity care by providers and others, and other sources of revenues to individual institutions.