AUSTIN, Texas — Texas has a growing problem with Medicaid costs in the state budget.

The state and federal health care program for the poor consumes 20 percent to 30 percent of the budget in state general revenue and all funds. This percentage will increase in the future.

Texas lawmakers left a $4.8 billion shortfall in Medicaid they must address in 2013.

Another state health care program has also had its share of red ink in recent years.

Correctional managed care, which is the health care program for 156,000 state prison inmates, costs about $1 billion this biennium. University of Texas Medical Branch-Galveston cares for about 75 percent of the prisoners. The rest receive health care at the Texas Tech University Health Science Center.

Officials at the Texas Department of Criminal Justice are racing to find other options for most or all of its prisoner health care. UT and UTMB leaders informed TDCJ officials in the fall that without adequate funding they intend to end correctional health services.

The program has run a deficit for at least the past three bienniums and it’s off to another poor start, said State Rep. Jerry Madden. R-Richardson, who also is House Corrections Committee chairman.

He said the program at UTMB already is running $45 million in the red and a request has been made to the Legislative Budget Board.

“The $45 million is the projected shortfall estimated by UTMB for (fiscal year) 2012 and is based upon UTMB providing the care,” TDCJ spokesman Jason Clark said in an e-mail.

LBB spokesman John Barton said the LBB has a deadline of the end of the month to decide whether to take $45 million from prisoner health care in 2013 and pay it in 2012. If that doesn’t happen, it will be part of a supplemental appropriations bill in 2013.

Texas lawmakers already face a large supplemental appropriations bill in 2013. It has the Medicaid shortfall and the deferred payment to schools, a total of $7.1 billion. The good news came last week when State Comptroller Susan Combs improved revenue projections by $1.6 billion.

UT expressed an interest in quitting prisoner health care in February after a state audit reported a large shortfall over a couple of years and was critical of billing methods. UT leaders relented on that at the request of lawmakers.

The deficit in the program is bad enough, but TDCJ officials who oversee the 111-prison system must have options to replace UTMB.

“All options are being discussed at this time. We signed an agreement with UTMB for FY 2012. The agreement contains language in the contract that allows for the ability to transition specific services.

“We are diligently working with UTMB toward developing either a 2013 contract or a transition agreement by Jan. 31.

“It’s uncertain at this time what the final delivery model will look like. The agency is looking at a heavier reliance on ‘free world’ providers and utilizing regional hospitals within the provider network,” Clark said in the e-mail response.

Madden said there has been talk of splitting health care into specific categories, such as dental and immediate care with a provider or providers in regions of the state.

State Sen. John Whitmire, D-Houston, and chairman of the Senate Criminal Justice Committee, did not respond to a request for an interview.

“TDCJ has been in discussions with other state medical schools as well as hospital providers currently in the provider network,” Clark said in the e-mail.

While officials seek options apart from UTMB, Texas Tech has signed a contract with TDCJ to continue to provide care there for the 2012-13 biennium.

The state must provide prisoner health care because it has been mandated by federal court decisions, and any change will receive intense scrutiny as to whether it satisfies that mandate.

Any hint of failure could result in litigation.

Curt Olson is an investigative report with Texas Budget Source. Texas Budget Source is a nonprofit journalism project of the Austin-based Texas Public Policy Foundation, with funding from the Franklin Center for Government and Public Integrity. Like Texas Budget Source on Facebook or follow TXBudgetSource on Twitter. Curt Olson’s Twitter name is olson_curt.