Texas Democratic Party
Says Rick Perry's "Pay to Play" politics led him to send $899 million to an offshore call center in Bermuda, driving down enrollment in children's health insurance

Texas Democratic Party on Monday, October 5th, 2009 in news release

The Democrats say Perry sent $899 million to an offshore call center in Bermuda that caused children to lose their health insurance through CHIP

As Gov. Rick Perry questioned efforts by congressional Democrats to pass a health care overhaul, the Texas Democratic Party accused him of undermining Texans' care with policies that benefit private companies instead of citizens.

"Perry's 'Pay to Play' politics led him to send $899 million to an offshore call center in Bermuda — a privatization scheme that deeply cost Texas taxpayers and resulted in 237,000 children losing their health insurance through CHIP," according to an Oct. 5 party news release. CHIP stands for Children's Health Insurance Program, which serves children of the working poor.

The specter of needy Texans forced to seek assistance from operators in Bermuda — causing more than 200,000 children to lose their insurance coverage — seemed shocking.

We wondered if the Democrats' charge was true.

The Democrats' news release cited a 2007 article by the San Antonio Express-News.We couldn't find anything in the Express-News article to back up the fiery claim.

A party activist quickly admitted at least partial error.

Phillip Martin of the Texas Democratic Trust, which helps the party, said the press release was worded incorrectly. "The call centers obviously weren't in Bermuda," Martin said, "but the company was based in Bermuda — so Texas taxpayers' money did go to a company in Bermuda."

The state had hired Accenture, a consulting and outsourcing company, to lead a group of companies called the Texas Access Alliance that would field social service applications and enroll clients. Accenture LLP, the U.S. subsidiary of Accenture Ltd., was incorporated in Bermuda in 2001, though shareholders voted last year to move the place of incorporation to Ireland.

But CHIP phone calls haven't been going to either country. In fact, they're answered in Texas.

We learned from the Health and Human Services Commission that the state's contract with Accenture required call-center employees to work from U.S. locations. The centers, located in Austin, San Antonio, Midland and Athens (the city near Tyler in East Texas — not Greece), have been run by Virgina-based Maximus, which signed a contract with the state when Accenture's role ended in June 2007.

Commission spokeswoman Stephanie Goodman said: "The only way a call could be sent out of state is if a catastrophic situation happened that took down all the phone lines."

In a broader context, the Democrats’ Martin suggested the creation of the call centers still was part of a Republican-fostered privatization scheme driving down CHIP sign-ups.

Martin’s point: In 2003, the GOP-led Legislature made a push for privatization. Part of that involved directing the HHSC to determine whether using call centers run by private firms would cut costs.

Kirsten Gray, Democratic Party communications director, explained that "'Pay to Play' is a political term of art," which we assume means Perry's politics are inspired by whoever coughs up enough money toward his career.

He did sign HB 2292 — the legislation that ushered sweeping changes into the state's health and human services — but Rep. Arlene Wohlgemuth authored the bill, and the Legislature passed it.

Accenture later landed the state’s call-center contract, which was projected to cost $899 million over five years, the cost figure cited by the Democrats. The privately run call centers were set up to process applications for CHIP, food stamps and Medicaid. Accenture ended up getting $245 million because Maximus took over the call centers.

We made a run at gauging whether the creation of the call centers alone reduced CHIP participation, as the Democrats claimed.

It’s just not so.

True, during the two years that Accenture was employed by the state, CHIP caseloads decreased and applications were lost in the system, causing children to lose health coverage.

But those numbers first dropped before the Accenture contract — after lawmakers approved policy changes restricting enrollment. For instance, an amendment adopted in the 2003 legislative session required clients to re-enroll every six months instead of 12 — a reduced time-frame intended to keep children from staying in the program past the time that their parents’ income surged. However, that resulted in more children being dropped from the rolls because their parents failed to re-enroll in time.

CHIP sign-ups rebounded a bit after legislators restored the 12-month enrollment period in 2007.

Anne Dunkelberg, associate director of the Center for Public Policy Priorities, which advocates for low-income Texans, summed up: "The state implemented some really, really ill-considered policy changes, all at the same time."

She said that a combination of policy changes, privatization and staffing cuts all contributed to CHIP reductions, but it's impossible to blame any one factor for CHIP reductions.

True, privatizing oversight of CHIP may not have delivered hoped-for savings, and enrollment may have been reduced.

But the Democrats' claim that Perry sent nearly $900 million to an outfit in Bermuda, directly causing more than 200,000 children to lose their health coverage, amounted to a big overreach. If they'd been more careful — even saying that the call centers were part of a troubled privatized model — our analysis may have been different.

But the party misstated the facts, undermining what could have been a meaningful critique.

We rule the statement False.