With Deadline Looming, House Sends Medicaid IOU Bill to Perry

Two days ahead of a crucial deadline, the Texas House sent a bill to Gov. Rick Perry Tuesday that pays off $4.5 billion in Medicaid IOUs and speeds up a $1.75 billion payment that schools were already expecting.

House members unanimously approved changes the Senate made last week to House Bill 10, the first supplemental budget bill of the session, after state Rep. Jim Pitts, R-Waxahachie and the chamber’s chief budget writer, endorsed them. He stressed that the bill needed to move forward immediately or the state risked Medicaid managed care providers not being paid starting Thursday.

“We will not pay our providers the day after tomorrow if we don’t pass this bill,” Pitts said.

The bill adds $13.5 billion to the current budget: $6.6 billion in state money and $6.5 billion in the form of a federal match tied to the state’s increased health care spending.

The House approved an earlier version of the bill last month that spent $4.8 billion in state funds, nearly all of it to undo a shortfall in Medicaid and the Children's Health Insurance Program in the current two-year budget. Lawmakers purposely underfunded those programs in 2011 with plans to address the difference this session.

Last week, the Senate approved a version of the bill that added $1.75 billion for schools in order to reverse a budget gimmick employed two years ago when lawmakers had less money to spend. Budget writers in 2011 agreed to push an education payment due in August 2013 to September, which pushed the cost to the next budget cycle. Lawmakers could have chosen to leave the payment schedule off by a month indefinitely, though that would block them from using the same budget trick in the future.

Pitts had planned to address the deferral in a standalone bill later this session. Senate Finance Chairman Tommy Williams, R-The Woodlands, said last week that he decided to add the deferral to HB 10 because the Legislature “presumes that the deferral is removed, and I felt it was important to get that done.”

Pitts told House members a second supplemental bill will likely come to the floor next month and allow members to propose adding more spending to the current budget, including reversing some of the $5.4 billion in cuts to education made last session.