COD E R E D

started in 2001 and 2002 to curb inappropriate payments. 73 The 2006 budget proposes somespecific measures such as recovering federal funds not used for their intended purposes,limiting payments to providers to their actual costs, decreasing the percentage of provider taxesthat can be used for the state Medicaid match, and elevating the importance of the oversight ofMedicaid and SCHIP financial management (including more state audits and evaluations). 74Poverty and the Uninsured in TexasTexas has the highest rate of uninsured people in the nation, at about 26 percent. In 2002, 25percent of the uninsured were aged 17 or under, 1 percent was 65 or over, and 74 percent werein between these ages. 75 Almost two-thirds of the uninsured adults in Texas have jobs, butTexas has a lower percentage of employers who offer health insurance than the nationalaverage. Even if an employer does offer insurance, lower-wage workers often cannot afford tobuy it. 76Medicaid and SCHIP provide health insurance for people who meet the eligibility criteria, whichinclude having a low income. The federal poverty level (FPL) is used as a standard fordetermining program eligibility. The maximum annual income allowed for eligibility may be acertain percentage higher or lower than this level, depending on the program and the service.The FPL is set by the federal government each year and updated for inflation, and it varies byfamily size. In 2004, the FPL was $9,310 for one person, $12,490 for two people, $15,670 forthree people, and $18,850 for four people (for each additional person add $3,180). In 2002,about 25 percent of the Hispanic population in Texas lived at or below the poverty level, alongwith 19 percent of African-Americans and 7 percent of non-Hispanic whites. 77 In addition,counties are responsible for providing care to the “medically indigent.” Appendix B delineatescurrent requirements and experience in local participation in health coverage.When talking about assisting low-income people in obtaining health insurance, an income lessthan 200 percent of the FPL is often used to define “low income.” In 2003, 3,267,020 people or61 percent of the uninsured in Texas had incomes at 199 percent FPL or less. Put another way,38 percent of all people under 200 percent FPL in Texas do not have health insurance. Ofthese uninsured people under 200 percent FPL, 29 percent are children 18 or under. 78 Someprograms target uninsured parents so that they will understand the value of health insuranceand might be more likely to insure their children or take them for medical care; fewer programsinclude childless adults. Of the 3.3 million uninsured people under 200 percent FPL, 37 percentare parents (defined as people 19 to 64 with children under 18 living with them), and 33 percentare childless adults (ages 19 to 64 without children or with children who do not live with them). 79Medicaid and SCHIP in TexasIn 2003 the Texas Legislature passed House Bill 2292 to consolidate the state’s 12 health andhuman services agencies into five agencies, with the Texas Health and Human ServicesCommission continuing to oversee the other agencies. HHSC is the single state agency incharge of Medicaid, but it is allowed to delegate many functions to other agencies. HHSC alsoadministers SCHIP. SCHIP and the children’s Medicaid program in Texas together are calledTexCare. (SCHIP is usually called “CHIP” in Texas but we use the full acronym here forconsistency.)History and Financing of MedicaidTexas joined the Medicaid program in September 1967. The federal government pays abouttwo-thirds of the cost of the Medicaid program in Texas (the exact percentage varies from yearto year). For federal fiscal year 2004, the federal share in Texas was effectively 62.67 percent,which is figured from a basic matching rate of 60.22 percent, an additional one-time increase ofB-16