With total annual expenditures of approximately $38 billion (including supplemental federal hospital funds), the Texas Medicaid program comprises about 29 percent of the entire state budget. Program caseload has grown considerably under the Affordable Care Act (ACA), even though Texas rightfully refused to expand Medicaid coverage to able-bodied adults. Since the ACA’s full implementation in September 2014, more than 4 million enrollees have been covered by Texas Medicaid each month. Because Medicaid is an entitlement program, eligible individuals must receive covered services and funding is open ended, meaning that neither the state nor the federal government can cap Medicaid spending.
One of the most effective and proven means of bending this cost curve, and providing high-quality affordable health care coverage, is through Medicaid managed care. Health plans are generally able to provide better care by helping coordinate and “manage” an enrollee’s health care to more preventive, lower cost settings, and by utilizing the providers within their networks. Plans also assume financial risk should costs exceed the negotiated per member per month (PMPM) rate, which helps provide budget certainty for the state.