Texas squanders $40 billion a year in taxpayer health care contributions

Photo by Callie Richmond

Many Texans I talk with are concerned about health insurance costs and tax dollars we spend on Medicaid and other programs for the poor. Yes, we are right to be concerned, but often we are misled into blaming federal programs or medical providers. Actually, a huge percentage of our tax dollars are wasted by state laws and policies we could fix here in Texas.

Texas taxpayers finance crucial health care services through at least seven different Texas-inflicted cost-shifting fees and hidden taxes totaling more than $40 billion each year. But does our current investment, averaging $4,750 per Texas household each year, give us better health? No. Texas still has the most uninsured in the nation and some of the worst health outcomes.

Tax dollars we contribute are absorbed by a fragmented, overly complex, wasteful "non-system" because some would rather grandstand and complain than actually make health care work well for us. As faithful taxpayers, we Texans should find this unacceptable. Let's take action against the waste and mismanagement in our current state system and develop a more rational, streamlined process.

The taxpayer burden Texas leaders refuse to lift

The $40 billion in squandered taxpayer health care contributions break down as follows:

  1. Texans pay federal taxes designated for part of each states' health care needs, but these dollars don't come back home to Texas. Why? State leaders refuse to expand Medicaid. We could bring $8 billion of our tax dollars back to Texas each year. Instead, this portion of our personal federal tax payments funds health care in other states — not in Texas! Cost to Texas taxpayers: $8 billion a year
  2. Texans pay property taxes that help cover costs for uninsured and underinsured treated at hospital emergency rooms because county governments are legally responsible for providing public emergency services, including health care services for the poor and indigent. While public health services should be funded, we are over-burdening Texas counties by refusing to expand Medicaid. Cost to Texas taxpayers: More than $2 billion a year
  3. Texans pay sales taxes instead of income taxes to fund all state services, including health care. Texas taxpayers send more than $30 billion a year in sales tax revenue to the state budget, and approximately a third of the state budget is allocated to Health and Human Services. Cost to Texas taxpayers: Approximately $10 billion a year
  4. Texans pay crippling societal costs for a state with more sick citizens and poor health care. Example: Texas treats most uninsured people with mental health issues in county jails. Shifting costs from a coverage solution to county jails and shelters costs the Texas economy more than $9.8 billion a year, state tax receipts are reduced and expenses increased by an annual amount of $3.4 billion. Cost to Texas taxpayers: More than $13 billion a year
  5. Texans pay higher health care insurance premiums on their own policies due to higher prices charged by providers to offset uncompensated care. This hidden tax averages $1,017 a year for families. For single individuals, an average of $368 a year was added to insurance premiums. Cost to Texas taxpayers: $6.6 billion a year
  6. Texans who self-fund their own health care pay at least 30 percent more as compared with negotiated insurance rates. Of the state's $3 billion dollars in hospital bills each year, 10.7 percent is "self-pay," and at least $96.3 million of $321 million in hospital bills to Texas taxpayers was in excess of the negotiated rate paid by people with insurance. Cost to Texas taxpayers: At least $96.3 million a year
  7. Texans pay up to 10.5 percent higher premiums for Marketplace health insurance because Texas refused to expand Medicaid and has not set up its own state-run exchange for health insurance. Health insurance premiums average 7 percent lower in states that expand Medicaid, and insurance plans on the federal exchange (Healthcare.gov) contain a 3.5 percent fee usually waived on state-run exchanges. Cost to Texas taxpayers: $54.3 million a year

However, our overall funding of health care costs goes well beyond this. Texas taxpayers purchase personal health insurance, pay premiums, co-pays and deductibles. We contribute tithes and offerings, helping those in need. Most of the products and services we purchase in Texas contain hidden fees to cover health care as part of the sellers' costs of doing business. Calculating the billions of extra dollars paid by 28 million Texans takes us far beyond a $40-plus billion tax burden.

So, what's the solution?

Coverage. Health insurance coverage for millions of the uninsured is the single most effective way to reduce costs and improve outcomes. Texas has the financial resources to expand health insurance access and the expertise to manage that care very well, despite what you hear from some Texas state leaders.

Expanding fiscally responsible coverage similar to our successful Texas-managed Medicaid program is part of the solution to this taxpayer burden that some state leaders either don't understand or are simply unwilling to lift. Medicaid managed care has not only improved outcomes, it has saved Texas taxpayers more than $10 billion over the past decade.

A federally funded program called the Medicaid 1115 Waiver is set to expire soon, taking with it billions of dollars our public hospitals and safety-net clinics need to care for Texans. We have a great opportunity to create an even better 1115 Waiver system. If Texas expanded coverage using a new 1115 Waiver, approximately 1 million Texans — half of them currently working full-time jobs — would qualify for health insurance, and the State of Texas would receive back at least $8 billion a year from our federal taxes.

Think of how our communities, roads, schools and emergency services — including health care — could be better if we could bring these billions of dollars back home to Texas. Texas will be a stronger and more prosperous land — and we will be healthier and more prosperous people — when our state implements a better system to fund, deliver and access health care.

Let's tell our elected officials to use the renegotiation of the current Medicaid 1115 waiver to reform our health care system, expand coverage, and stop wasting taxpayer dollars. Let's bring that $8 billion a year back to Texas, put our billions in taxes and costs to better use, and let's save lives while we're at it.

Ken Janda

CEO of Community Health Choice