March 2, 2015 —

Studies Commissioned By Texas Association of Health Plans Show Billions Saved As Care Improves

Austin, TX – To provide perspective on today’s announcement by Lt. Governor Dan Patrick and Senator Charles Schwertner (R-Georgetown), on the ongoing financial challenges presented by the Affordable Care Act, the Texas Association of Health Plans (TAHP) shared findings from two studies showing the positive impact of the Medicaid managed care approach in Texas. Adopted by the state to provide care for some of the most vulnerable populations in Texas, Medicaid managed care has saved the Texas Medicaid program nearly $4 billion over six years. This is in comparison to projected costs under the former approach known as “fee for service” (FFS). Projections indicate the approach is expected to save an additional $3.3 billion all funds over the next three years using the managed care model compared to projections under a FFS model.

“We appreciate Lt. Governor Patrick and Senator Schwertner for calling attention to the ongoing health care budget challenges facing our state,” said Jamie Dudensing, CEO of TAHP and former practicing nurse. “Our state’s success in leveraging the flexibility allowed by the current Medicaid system is proof that Texas is ready to handle even more flexibility in the way we deliver care.”

The TAHP­ funded studies, conducted by respected health care research firms Milliman and Sellers Dorsey, also showed that, in addition to reducing Medicaid costs for the programs studied by nearly 8% (Milliman), MCOs have also increased access to services and improved quality of care (Sellers Dorsey)

“In their letter to President Obama, the authors point out the effectiveness of the Texas Medicaid MCO model: ‘The transition to managed care, execution of the Section 1115 waiver, and other cost containment initiatives have saved taxpayers hundreds of millions of dollars in recent years,’” concluded Dudensing. “Our studies show that Medicaid managed care is a fiscally responsible pathway to a healthier Texas and our MCOs will continue doing their part to keep it that way.”

The studies can be downloaded for closer study:

Milliman: “Texas Medicaid Managed Care Cost Impact Study” >

Sellers Dorsey: “Medicaid Managed Care in Texas: A Review of Access to Services, Quality of Care, and Cost Effectiveness”

In addition, a TAHP overview of Medicaid managed care can be downloaded here: “MEDICAID MANAGED CARE: A Fiscally Responsible Pathway to a Healthier Texas”


Under managed care, the state pays “block payments,” a fixed per ­person, per­ month amount (also known as capitation) to a managed care organization (MCO). The MCO assumes the full financial risk of costs, limiting the state’s financial exposure. In return for the capitated payment, the MCO provides comprehensive health care benefits, manages all medical services and administrative functions and assumes responsibility for all payments associated with the medical care of the enrollee. This approach also provides a higher degree of cost predictability for state budget writers.

The Texas Association of Health Plans

The Texas Association of Health Plans (TAHP) is the statewide trade association representing private health insurers, health maintenance organizations, and other related health care entities operating in Texas. Our members provide health and supplemental benefits to Texans through employer-sponsored coverage, the individual insurance market, and public programs such as Medicare and Medicaid. TAHP advocates for public and private health care solutions that improve the affordability, access and accountability of health care for many Texans. As the voice for health plans in Texas, TAHP strives to increase public awareness about our members’ services, health care delivery benefits and contributions to communities across Texas.