force no uncalled-for drain on available professional manpower and medical facilities. The total cost would be adequately met by the state without risking the waste of public funds experienced under the federalstate programs in effect in other states.

However, if other considerations dictate the enactment of a program which takes advantage of the availability of federal funds, it is suggested that such safeguards as are possible be included in the legislation which will protect the state against excessive and uncalled-for drains upon its medical resources, against waste of public funds, and which will also assure priority of treatment to those on the welfare rolls in actual, serious need of medical care. This will be difficult under the federal programs as presently constituted, and it may necessitate appeals to Congress to remove existing restrictions so that the states may exercise more latitude in developing sensible medical care programs adapted to the needs of their people.

A detailed review of the proposed state-financed program and alternative federal-state programs will be found in Chapter V the concluding Chapter of this report.

THE EXPERIENCE

OF OTHER STATES

Most states entered this field by accepting federal funds and anticipating a total expenditure of only a few million dollars annually. The costs of their programs have risen rapidly in a few years. For example, in the state of Washington during the 1947-49 biennium medical care costs were $16.4 million, and in the 1957-59 biennium they rose to $51.7 million. Generally costs have not leveled off after the programs have been in existence a few years, because the "demand" for medical services continues to increase, and medical costs are forced upward.

Increasing medical demand and subsequent larger and larger government spending for medical services in these states do not prove that medical needs are greater there than here in Texas. Actually it proves only two things:

☆ That more and more persons, agencies and institutions are finding ways of shifting their expenditures for medical care on to the state-federal programs.

That if persons do not have to pay for medical care, they tend to use free medical services to the extent they are available, regardless of their individual needs.

Texas can profit by the mistakes of these other states and devise a medical care program that does not permit this to happen.

CONCLUSION

Indigent medical care needs and programs have been little studied, and factual data about this elusive field are fragmentary and unreliable. This report attempts to sift fact from fiction in a welfare problem area supercharged with public emotion and political interest. Traditionally in the public welfare field the desire to achieve uniformity and eliminate controversy has made welfare programs so broad-based that they do not meet those intense needs that presumably motivated their enactment. Because in the medical care field the problem often involves the life of a person, this classic pattern must be avoided. If it is not, despite large outlays of public moneys, persons in real need of medical care on a major scale will still not have that level of care forthcoming, and what passes for a medical care program will amount, in effect, to a welfare "dole."

Chapter I

BACKGROUND

The 57th Session of the Texas Legislature will be faced with determining whether Texas should enact a new vendor payment medical care program aimed at providing medical services to the 319,000 Texas public assistance recipients. Such a program has been authorized by the Federal Congress, and Federal matching funds are available. In the 1958 General Election, a state Constitutional amendment was passed authorizing the Texas Legislature to enact such a program. It is anticipated that implementing such a program will be one of the most important matters before the 57th Legislature.

Do Texas public assistance recipients need such a program? To what extent should such a program be financed by the local, state and Federal governments? What resources exist at present? What medical services should such a program embrace? These are only a few of the questions which the Texas Legislature will want answered as it considers proposals for a medical care program.

THE SCOPE OF

THIS STUDY

This report analyzes the problem of indigent medical care in Texas as it affects the administration of the public assistance programs by the State Department of Public Welfare. This study does not include an exhaustive analysis of all indigent medical care now being given in Texas. Such an analysis would be both timely and useful; however, the Texas Department of Public Welfare is responsible for only part of the care now being given and could not, under present constitutional provisions, be given responsibility for medical care to those not otherwise entitled to a public assistance grant.

This study is restricted to those areas of the Department's responsibility which now exist or could exist in the immediate future with the passage of a vendor payment program as authorized by the Constitutional amendment of 1958.

In a real sense this study is unique. Rather than analyzing a welfare program already in existence and recommending changes to make that program more effective, this study is partially concerned with determining the need for a welfare program not now in effect; and if a need

is found to exist, with determining the best method of meeting such a need. This approach has rarely been taken, at least in this State.

LEGAL

BACKGROUND

In 1950, Congress approved amendments to the social security law which would permit payments made directly to suppliers of medical services, i.e., "vendor payments." No additional funds were appropriated by Congress at that time. The amendments authorized states to use existing public assistance funds for such purposes. No action has yet been taken in Texas pursuant to these amendments.

THE 1956 FEDERAL ACT: In 1956, Congress passed a new amendment to the social security law which established a special matching formula for medical care. Funds were to be supplied above the regular grant on a 50-50 matching basis by the Federal and state governments. In its 1957 Regular Session, the Texas Legislature passed a resolution calling for a change in the State Constitution to permit vendor payments under the 1956 matching formula. The question was to be submitted to a vote of the Texas electorate at the next General Election in November, 1958. In October, 1958, however, the Federal Congress once again changed the social security provision to put federal matching for medical care back into the regular grant, and the matching formula was changed to one based on the per capita income of the state concerned.

In November, 1958, the Texas electorate approved the Constitutional amendment to permit vendor payment of medical care for public assistance recipients. The final vote was 380,313 for and 244,915 against. This amendment became Article 3, Subsection 51A-1 of the Texas Constitution, and:

Empowered the Legislature to establish a direct or vendor payment program;

☆ Limited such a program to needy recipients of Old Age Assistance, Aid to the Blind, Aid to Dependent Children, and Aid to the Permanently and Totally Disabled;

Made such payments additional to direct assistance payments but stipulated that the amount paid out of state funds should never exceed the amount paid out of Federal funds.

The 56th Legislature did not establish such a program in 1959, although an enabling bill was drawn and introduced in the Senate.

THE 1960 FEDERAL ACT: Before Texas could get the 1958 Con

stitutional amendment into an operating program, the 1960 Federal Congress again amended the social security act to broaden its medical care coverage to include "... medical assistance on behalf of aged individuals who are not recipients of old age assistance, but whose income and resources are insufficient to meet the cost of necessary medical services . . ." This law prohibits a lien being placed on an individual's property to compensate for public moneys used for medical care. It also increases medical care benefits of Old Age Assistance recipients.

These 1960 amendments are much more sweeping than the 1956 Federal amendments which gave rise to the 1958 Texas Constitutional amendment. Part of the 1960 amendments which pertain to the Old Age Assistance program can be put into effect here in Texas without constitutional change. Others which pertain to "medically indigent" persons not OAA recipients would require a new Constitutional amendment authorizing such a program plus legislative enactment and the appropriation of matching funds. Thus this latter program which pertains to nonOAA cases is probably three years away from adoption in Texas.

MEDICAL FUNDS FOR OAA CASES would be sharply increased under these 1960 amendments. The federal matching maximum is increased from $65 per recipient per month to $77 if the additional $12 is used for medical purposes. For this additional $12 per recipient per month, the federal share would increase from 60.79% to 75.79%. Thus if Texas can show that it is providing, out of state or local funds, $8.9 million in medical care for public assistance recipients, it can receive $26.1 million in federal matching funds.

Since the only public assistance category affected by these amendments is Old Age Assistance, this means that when persons eligible for either Aid to the Blind or Aid to the Permanently and Totally Disabled become eligible for OAA by virtue of reaching age 65, they will automatically shift to the OAA rolls where the medical benefits will be greater.

STATE-FEDERAL PUBLIC ASSISTANCE FUNDS are at present being spent for the medical needs of public assistance recipients. This occurs under federal-state laws and regulations which permit each public assistance recipient to have his medical care needs taken into consideration when his budget is worked out by the Welfare Department. If the grant is less than the maximum (for example, $68 per month is the maximum for OAA cases) part or all of the difference between the actual payment and the maximum grant may be allocated to meet medical