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Seal of the Senate of the State of Texas
Welcome to the official website for the
Texas Senate
September 21, 2004
(512) 463-0300

State Health Plans Examined at Capitol

The Senate Committee on State Affairs is continuing its examination of health related issues this week with a look at the state group health insurance plans as it tries to find additional ways to cut costs. Today, September 21, 2004, it took a close look at the Employees Retirement System, the Teachers Retirement system, as well as health plans administered by the University of Texas and Texas A&M University. Committee Chairman Robert Duncan said that since 1998, state health care expenditures have gone up by more than fifty percent and that it's the one area where the state hasn't had a lot of control.

Darren Rogers of Blue Cross/Blue Shield of Texas gave the committee an overview of the state-funded plans, which have the best benefits and which are the most expensive for the member. He told the committee that the plans are currently performing as expected. As for costs, he said that outpatient costs are going up while in-hospital costs are actually going down slightly, and that he didn't know when recent medical malpractice law changes in Texas would translate into an actual cost savings for the state. When asked by Chairman Duncan what would happen if the state simply refused to pay the ten percent a year increase in costs, Rogers said people would actually have to go to higher-cost providers, as hospitals and doctors refused to accept the state rates.

Dr. Joe Cheek with Aetna told the committee that the cost of drugs has been a major reason that his company's costs are increasing, that spending on them has increased fifteen percent a year since 1997. He said that with increased advertising, patients are demanding new drugs that are more and more expensive. With regard to overall health care costs, Cheek testified that there is no one solution, but rather a number of issues that need to be addressed.

Mark Wermes of Medco, the company that administers the state's prescription drug plan, told the committee that recent plan changes for the Employees Retirement System had been successful in cutting costs. James Margioli of Caremark, the prescription drug plan administrator for Teachers Retirement System, testified that the best price given the federal government for prescription drugs under the Medicaid program is confidential. Chairman Duncan said his goal is to use the best price given the feds as an index to see how successful the State of Texas is in getting the best deal for prescription drugs for its own plans.

Spencer Berthelsen, representing the Texas Medical Association, said that part of rising medical costs were unhealthy lifestyles by the participants, that obesity by itself was a ten billion dollar problem. Patricia Kolodzey of the Texas Hospital Association spoke on the challenges of controlling costs for in-hospital patients. John O'Brian, from Pharma, the Pharmaceutical Industry trade group, said that programs such as controlling costs through mail order were effective, but that there were trade-offs. He also assured the committee that drug companies that follow their code do not give physicians gifts in exchange for prescribing medications.

Dave Cuellar of Aetna Health Care briefly described the key differences between proposed state programs such as Health Savings Accounts (an IRA-type account) and Health Reimbursement Account. He also emphasized that unless the consumer is engaged in controlling the cost of health care that "we are going to have increases forever."

The Senate Committee on State Affairs is chaired by Senator Robert Duncan. Vice-chair is Senator Tommy Williams. The members include Senators Ken Armbrister, Rodney Ellis, Troy Fraser, Chris Harris, Frank Madla, Jane Nelson and Florence Shapiro. The committee recessed with its next meeting scheduled for tomorrow, September 21st, in the Senate Chamber.

Also meeting today was the Senate Finance Committee. Today it heard budget reports from the courts. Scheduled on today's agenda were the Supreme Court, the court of Criminal Appeals, and the office of Court Administration along with four other judicial agencies.

Regulatory agencies testified as well. The Committee was to hear from the Board of Public Accountancy, the Board of Architectural Examiner, the Board of Professional Engineers, the Credit Union Department, the Residential Construction Commission, the Office of Public Insurance Counsel, the Board of Professional Land Surveying, the Department of Licensing and Regulation, the Board of Nurse Examiners the Pest Control Board and the Real Estate Commission.

The Senate Committee on Finance is chaired by Senator Steve Ogden. The Vice-Chair is Senator Judith Zaffirini. Members include Senators Kip Averitt, Gonzalo Barrientos, Kim Brimer, Bob Deuell, Robert Duncan, Kyle Janek, Jane Nelson, Florence Shapiro, Eliot Shapleigh, Todd Staples, Royce West, John Whitmire and Tommy Williams. The Committee recessed subject to call of the chair.

Session video and all other Senate webcast recordings can be accessed from the Senate website's Audio/Video Archive.