HB 3348 authorizes a narrowly defined group of counties—specifically those with populations over 900,000 that border two counties with populations over 2 million and lack a hospital district—to impose mandatory financial assessments on nonpublic hospitals to fund the nonfederal share of Medicaid supplemental payment programs. This mechanism, known as a Local Provider Participation Fund (LPPF), pools these private hospital payments to draw down federal matching funds through Medicaid waivers, directed payment programs, and other related reimbursements. While intended to provide indigent care without relying on general tax revenues, the method of funding raises significant concerns regarding core liberty principles and the proper role of government in public-private fiscal relationships.
The bill undermines the principle of Free Enterprise by compelling private hospitals to make financial contributions to a county-administered fund without their voluntary agreement. These assessments are based on a hospital’s net patient revenue and are not negotiated, elective, or avoidable. Although the bill includes some limitations, such as a maximum aggregate assessment of 6% and a prohibition on patient surcharges, it still enforces a government-imposed diversion of private revenue. This kind of compelled participation distorts the market by inserting governmental mandates into what should be voluntary and competitive financial decision-making among healthcare providers.
In terms of Private Property Rights, the bill authorizes a governmental body to effectively claim a share of a private institution’s revenue without offering compensation or meaningful recourse. Private hospitals are mandated to finance public objectives solely due to their location within a qualifying county. This amounts to an indirect seizure of financial assets for public use without consent. While the program’s revenues are directed to Medicaid-related purposes, the structure still denies institutional autonomy over how privately earned resources are utilized—an infringement on both economic liberty and property rights.
HB 3348 also expands the role of local government in a manner that is inconsistent with the principle of Limited Government. The bill allows a county commissioners court to establish and oversee a complex funding mechanism, collect payments from private entities, manage a restricted-use financial fund, and engage in intergovernmental transfers with the state, all without requiring direct voter approval. Though limited in geographic scope, this framework enables counties to assume quasi-taxation authority over private enterprises indefinitely, with little legislative oversight once established. It further authorizes counties to create administrative rules for the program and contract with third parties to assess and collect payments, introducing new layers of bureaucracy and potential administrative costs.
While the bill contains guardrails on fund usage, such as prohibitions on Medicaid expansion or general revenue use, these restrictions do not eliminate the underlying problem of compelling private actors to underwrite public fiscal obligations. Even though the fiscal note projects no cost to state or local governments, the real financial burden is transferred to a small group of private hospitals, whose costs and incentives may shift as a result. This could have downstream effects on service availability, provider sustainability, and healthcare pricing structures within the county.
Finally, HB 3348 lacks key structural safeguards that would be essential to justify a mandate of this magnitude. There is no sunset provision requiring periodic legislative review, no public referendum for program renewal, and no meaningful opportunity for hospitals to opt out if they disagree with the terms. The absence of these checks reinforces concerns about accountability and transparency in the ongoing administration of the program.
In sum, although HB 3348 aims to address a real issue in county-level Medicaid financing, it does so by expanding governmental authority at the expense of foundational liberty principles. By conscripting private entities into a compulsory funding model without consent, the bill violates the spirit of free enterprise, erodes property rights, and invites future mission creep without adequate oversight. For these reasons, Texas Policy Research recommends a NO vote on HB 3348.
- Individual Liberty: While the bill does not restrict individual freedoms directly, it alters the healthcare financing environment in ways that could affect individuals' access to and affordability of care. By imposing new financial burdens on nonpublic hospitals, the bill could lead those hospitals to reduce services, delay expansion, or reallocate resources in a way that diminishes patient options. The increased costs associated with mandatory payments, though not passed on as direct surcharges, may still manifest in the broader healthcare system, ultimately impacting individuals' liberty to access care from private providers under competitive conditions.
- Personal Responsibility: The bill reduces the role of individual and institutional responsibility by shifting the burden of indigent care financing from publicly accountable mechanisms (e.g., taxation or voter-approved hospital districts) to mandatory assessments levied on a subset of private hospitals. Rather than encouraging communities to collectively and transparently support healthcare through elected government channels, the bill assigns funding obligations to a select group of providers without their voluntary consent. This arrangement dilutes public accountability and disconnects funding decisions from direct civic participation.
- Free Enterprise: The bill significantly infringes on the principle of free enterprise. It mandates that private, nonpublic hospitals contribute a percentage of their net patient revenue to a public fund administered by the county government. These payments are not voluntary, not negotiated through a competitive process, and not accompanied by any contractual benefits. This mandatory participation model disrupts free-market dynamics by placing private institutions under an ongoing financial obligation to a government-run fund, regardless of each provider’s size, margin, or business model. It establishes a precedent that private economic actors can be conscripted to fund public programs outside traditional taxation mechanisms.
- Private Property Rights: The bill affects private property rights by redirecting a portion of private hospital revenues toward a public use without compensation or the hospital’s consent. The ability to control and allocate one's financial resources is a fundamental expression of property rights, and the bill allows a local government to override that right via geographic designation alone. Hospitals have no realistic opt-out mechanism unless they relocate or shut down services. This compulsion challenges the concept of private control over lawful earnings and institutional autonomy.
- Limited Government: The bill expands the scope of local government authority without introducing corresponding checks or balances. The bill enables a county commissioners court to create, manage, and perpetuate a quasi-taxation mechanism over private entities without voter approval or a mandatory legislative review process. It introduces administrative powers (rulemaking, assessment, enforcement, contracting with collectors) that go beyond traditional county functions and lack key limits such as sunset clauses or required public referenda. This creates a durable, taxpayer-adjacent funding stream governed by appointed, not elected entities, weakening transparency and direct accountability to constituents.
