e-Texas e-Texassmaller smarter faster governmentDecember, 2000
Carole Keeton Rylander
Texas Comptroller of Public Accounts

Recommendations of the Texas Comptroller

Chapter 8: Health and Human Services

Change Medicaid Budgeting

to Increase Accountability


Spending on Texas’ Medicaid program has increased steadily over the last 20 years. Because multiple agencies use Medicaid funding for dozens of programs, policymakers find it difficult to track the overall spending of Medicaid funds. A consolidated Medicaid budget would allow state leaders to better assess state and federal spending on these programs to ensure that the best use is made of every tax dollar.


Public and private health care costs rose rapidly in the 1980s and 1990s. Medicaid is a joint state-federal health care program that provides medical services, medicines, and long-term care to low-income Texans. The number of Texans receiving Medicaid services has risen in the 1990’s, primarily due to broader eligibility criteria for pregnant women, infants and children, the elderly, and the disabled.

As a result of broader eligibility and health care inflation, Texas’ Medicaid spending rose by an average 14.3 percent annually from 1988 to 1999, when spending reached $11 billion. In 2001, Texas Medicaid spending is expected to reach $12 billion, with the state paying about a third of that amount (Exhibit 1 and 2).

While Medicaid accounts for a significant part of the state’s budget, policymakers find it difficult to analyze this spending because it is divided among a number of state agencies.

The Texas Health and Human Services Commission (HHSC) administers the state’s Medicaid plan. Because HHSC does not prepare a comprehensive Medicaid budget, however, Medicaid expenditures are accounted for in separate agency budgets, making it difficult and time-consuming to obtain total Medicaid budget and spending figures.

When the Comptroller’s office prepared a recent report on Texas health care spending, it proved difficult to determine which agency spends what amount of Medicaid dollars in any given time period. Several categories of spending overlap and two different agencies sometimes report the same expenditure.

At present, the Department of Human Services reports to the federal government on Texas’ Medicaid each quarter. This report, however, provides figures broken down by federal program. To be useful for state legislators, such information should be broken down by state agency and program. Without such a breakdown, state lawmakers and the public cannot determine who is responsible for cost overruns and, therefore, cannot enforce basic financial accountability.


A. State law should be amended to require the Health and Human Services Commission (HHSC) to develop a comprehensive Medicaid budget that captures all Medicaid spending by each state agency and program. This report should be delivered to each biennial session of the Legislature.

This budget should identify agency expenditures by program and consolidate them into a single, easily understood Medicaid budget.

Other state agencies paying for services with Medicaid funds should be required to cooperate with the preparation of this budget, including the Texas Department of Health, Texas Department of Human Services, the Texas Department of Protective and Regulatory Services, the Texas Department of Mental Health and Mental Retardation, and the Interagency Council on Early Childhood Intervention.

B. HHSC should report actual Medicaid spending on a quarterly basis to the Legislature, the Governor, and the Comptroller of Public Accounts.

This information should be broken down by state agency and program, to ensure its usefulness as an accountability tool.

Fiscal Impact

The budget and spending reports could be prepared with existing agency resources.

e-Texas is an initiative of Carole Keeton Rylander, Texas Comptroller of Public Accounts
Post Office Box 13528, Capitol Station
Austin, Texas

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