Masking the Cuts


Would you pay an auto mechanic to dismantle and rebuild your car’s entire engine simply to increase its fuel efficiency enough to save 25 cents a month on gasoline?

That’s essentially what Texas is doing with its health and human services delivery system. State agencies are in the process of implementing last session’s House Bill 2292 that mandated the merging of 12 social services agencies into five super-agencies. The stated goal was to help close the budget gap by eliminating waste and fraud, and by streamlining administrative costs. At a Senate budget hearing on May 24, Albert Hawkins, head of the Health and Human Services Commission (HHSC), revealed to lawmakers just how much money the state will save from the massive restructuring. The grand payoff is expected to total—drum roll, please—$80 million.

Now, $80 million may sound like a lot of money. It could, after all, pay for a major motion picture or cover the annual payroll of the Houston Astros. In relation to the sprawling state budget, however, $80 million is infinitesimal. Texas spends about $22 billion in state and federal dollars every two years on social services alone. A savings of $80 million accounts for less than one-half of 1 percent of that $22 billion. (To continue the car analogy: If you spend $600 a year on gas, the comparable annual savings would be $2.40). That’s not savings. That’s a rounding error.

HHSC is undertaking a huge effort to glean this inconsequential amount. It has dissected agencies, eliminated key advisory panels, changed agency names (with the added costs of altering letterhead, engraved signs and the like), and plans to lay off thousands of state workers. The state has also signed nearly 100 contracts with private companies to help implement the restructuring. HHSC has yet to disclose fully the costs of these deals, so it’s conceivable that the overhaul may cost the state money.

That wasn’t how HB 2292 was sold. The bill’s author and driving force, state Rep. Arlene Wohlgemuth (R-Burleson), told lawmakers and the public that the HHSC restructuring would save $1.1 billion in 2004 and 2005. Wohlgemuth continues to make this claim while she campaigns for Congress.

Well, in the short run—the very short run—Wohlgemuth may well be right. But most of that billion-dollar savings has nothing to do with bureaucratic reshuffling. The bill also includes severe cuts to the state’s Children’s Health Insurance and Medicaid programs. Roughly $600 million of the billion-dollar savings in HB 2292 arises from these cuts. The CHIP reductions have been well documented. But the legislation slashed about $450 million in state money from Medicaid as well, cuts that have swiped services from hundreds of thousands of mostly elderly and disabled Texans. They lost coverage of podiatry, eyeglasses, hearing aids, and mental health services to name just a few examples. Tens of thousands were winnowed off the program due to new bureaucratic barriers. Tens of thousands of uninsured parents who suffered catastrophic injuries and whose medical bills devour most of their salaries are no longer eligible for Medicaid.

When HB 2292 came to a vote, most lawmakers ostensibly were voting to “consolidate†and “streamline†bloated government. The HHSC reorganization has served as a convenient vehicle for some of the harshest benefit cuts any state has ever enacted. In the end, Texas may save the equivalent of that 25 cents a month on gas. But it is the hundreds of thousands of vulnerable Texans deprived of services who have actually saved the state money. And their suffering will be passed on as increased costs to local governments. —DM