NCPA - National Center for Policy Analysis


January 5, 2005

Medicaid and the Children's Health Insurance Program (CHIP) will bankrupt every state by the year 2014, according to Chris Patterson of the Texas Public Policy Foundation.

The state of Texas has already spent $17 billion on Medicaid and $808 million on CHIP, with both programs covering a total of 3,407,000 people. Yet, some Texas lawmakers want to expand enrollment.

However, Tennessee tried that route, and Texas might take heed, says Patterson:

  • Ten years ago, Tennessee created TennCare, a state-subsidized program to cover the uninsured; TennCare now covers 25 percent of the state's population and consumes 33 percent of the state budget.
  • TennCare's costs have tripled, forcing the state to ration health care by limiting enrollees to 12 doctor visits per year and six prescriptions per month.
  • TennCare is expected to post a $650 million deficit in 2005, prompting Governor Phil Bredesen to consider dismantling the program.

A better and more consumer-driven alternative is Health Savings Accounts (HSAs), which have been in place since January 1, 2004, says Patterson:

  • Most participants pay less than $100 per month and 30 percent of them use the accounts for preventive care, which saves on costly health care expenses lately.
  • HSAs meet the needs of various age and income brackets; more than 70 percent of HSA participants are over age 40, more than 75 percent are families with children, and 27 percent have family incomes of less than $50,000.

HSAs are a benefit for families struggling to make ends meet and have actually reduced the number of uninsured Americans over the past year, explains Patterson.

Source: Chris Patterson, "Drowning in Health Care Costs' Texans Deserve Lifeboats Off the Health Care Titanic," Texas Public Policy Foundation, December 2, 2004.


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