Hospitals: Driver Responsibility surcharge an unreliable funding source

Regular readers know this blog would like to see the Driver Responsibility surcharge abolished, but in the current budget environment, all that's actually moving in the Texas Legislature is a more modest bill to require DPS to implement incentive rules that are already in the Administrative Code. The main reason killing the surcharge is so difficult: It raises about $3 million per week, half of which goes to the state General Revenue fund and half of which supposedly goes to trauma hospitals. Except most of the money for trauma centers never makes it there. In the Houston Chronicle today, there's an editorial from trauma hospital officials related to the Driver Responsibility Program that raises an interesting question: Why is it that most of the money that's supposed to go to trauma centers is sitting in a state bank account instead of paying for hospital care? From the op/ed:

Since 1993, the Designated Trauma Facility and EMS fund has helped offset uncompensated trauma care costs in designated trauma facilities. Since 2004, a portion of the proceeds from the Driver Responsibility Program have been the main source of funding. Unfortunately, since 2006, only a portion of the funds collected have been appropriated and distributed. 

And, by the end of the current biennium, the fund is projected to have collected some $300 million not appropriated to support the state's safety-net hospitals like UTMB, Memorial Hermann and Ben Taub.

This is unacceptable. Having a statewide trauma system benefits everyone, and the state should support this resource with funds intended for that purpose. Simply put, we must strengthen the state's trauma system safety net. Otherwise, we run the serious risk of stretching it too thinly and reducing survival rates for critically injured patients in the region. Left unchecked, the safety net that we all depend on when minutes count will fail.

In the scheme of things, trauma centers have done at least as much to reduce murder rates and drunk driving deaths as police and criminal laws in the last two decades, just because when bad things happen people are less likely to die if they make it quickly to a Level 1 trauma center. So I strongly agree they need to be funded by a reliable revenue source. But the Driver Responsibility surcharge has not turned out to be very reliable, bringing in hundreds of millions less to hospitals than was promised by supporters and the Governor in 2003 when it first passed. There's about a 65% non-payment rate, and of course, of the money designated for hospitals, "only a portion of the funds collected have been appropriated and distributed." Becca Aaronson at the Texas Tribune earlier this year mentioned this little-discussed aspect of the DRP - the fact that most of the money designated for hospitals doesn't actually get there:

In initial budget proposals, lawmakers have resisted alloting the fund's full amount for trauma care because it helps pad the state's general revenue account.

“It’s sort of a savings account for the state,” said Dinah Welsh, CEO of Texas EMS Trauma and Acute Care Foundation. Because the funds are dedicated, they can’t be appropriated for any other purpose — so if they’re not marked for trauma care, “they sit in an account sort of in the sky," Welsh said. The Legislature appropriated $150 million last biennium for trauma care from the dedicated DRP fund, she said, but an additional $380 million stayed in the DRP account.

Why leave that much money undistributed? ¿Quien sabe? If I had to guess, that money is likely being used to draw down some sort of federal matching funds. Or else I can think of no reason why nearly half a billion dollars would be left in an account undistributed in these tight budget times. That money should be allocated to hospitals in the current budget, or somebody should publicly explain why not.

It should be said: Despite my opposition to the DRP, I want trauma centers funded as much as the next guy. When my 12-year old niece died in a terrible church bus accident along with another boy a couple of years ago, a trauma center in Mississippi kept her alive for three weeks before she gave up the ghost, and saved the lives of many other badly injured children. When a school or church bus turns over, when somebody gets shot or is in a terrible car accident, of course I want the hospitals to have the resources they need. But that's what taxes are for.

Grits wholly agrees with the hospital editorial writers that "the state should support [trauma centers] with funds intended for that purpose," and I see no valid reason to withhold their money. But the problem is the Driver Responsibility surcharge has too many "purposes"; it's a servant with too many masters. Its purpose is partially to fund trauma centers, in theory, but only half the money goes to hospitals, and they don't get most of what's designated for them. The $380 million hospitals didn't get is serving some purpose we can't at the moment divulge. The other half of the money goes to General Revenue, which is functionally the main purpose of the surcharge at this point, since the hospital money isn't all getting distributed.

And of course the DRP's original, stated purpose - at which it's miserably failed - was to encourage drivers to purchase liability insurance, renew their licenses, and to discourage DWI. Instead, the surcharge has caused about 2 million drivers to lose their licenses for non-payment, with more than 1.2 million remaining off the license rolls to this day. That in turn leaves them ineligible for insurance, including thousands of drunk drivers. Speaking of whom, the fees are so draconian, prosecutors have begun pleading DWI charges down to things like "reckless driving" or obstructing a roadway," resulting in a 29% decline in total DWI convictions in the first four years after the surcharge was implemented, even though DWI arrests increased over the same period.

This is what a political consultant friend of mine calls an "origami" policy - fold it this way it looks like one thing, fold it that, another. Williamson County District Attorney John Bradley has called it "taxation masquerading as a public safety initiative." The DRP's weakness is a lack of focus; in trying to be all things to all people, the surcharge has failed at every goal set out for it, from funding hospitals to punishing DWIs and reducing the number of uninsured drivers on the roadways.

Stepping back to look at the issue from 30,000 feet, at some point, Texas will need to make structural changes to finance the state healthcare system because the figures they need to cover Medicaid in the long-term will run into the many billions, making the $75 million per year or so that's supposed to go to hospitals from the DRP look like chump change. Minor adjustments to hospitals' Medicaid payment schedules would reduce their funding more than that. When those charged with rethinking healthcare finance at the Lege finally get down to envisioning a new finance model - and that may not happen until a special session or even 2-4 years from now - ideally they should subsume funding for trauma centers into whatever fix they finally come up with, creating a real dedicated fund where the money actually gets to the hospitals and just get rid of the DRP. At this point, as evidenced in today's op/ed, even the people who supposedly benefit most from the surcharge as constituted aren't happy with it.