LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
April 26, 1995
TO: Honorable John Smithee, Chair IN RE: Committee Substitute
Committee on Insurance for
House of Representatives House Bill
Austin, Texas No. 2766
FROM: John Keel, Director
In response to your request for a Fiscal Note on House Bill No.
2766 (relating to providing fairness and choice to patient and
providers under managed care health benefit plans; providing
penalties) this office has determined the following:
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
The bill would amend the Insurance Code to add the "Patient
Protection Act" and provide that the Commissioner of Insurance
shall promulgate policy rules for managed care entities doing
business in Texas, including compliance.
Implementation of the provisions of the bill would result in
significant fiscal implications for the Department of Insurance.
Additional resources would be needed for rule adoption
proceedings and compliance enforcement. Additional revenue would
be generated from filing fees. The table below reflects only the
fiscal implications for the Department of Insurance.
The bill would also affect the group insurance programs for
general and higher education state employees. These programs
utilize managed care networks and are administered by the
Employees Retirement System, the University of Texas System and
the Texas A&M System. According to the Teachers Retirement
System, the bill would not affect the TRS Retired Public School
Employees Group Insurance Program.
These programs would be affected by the provisions of the bill
for health care provider certification and decertification for
participation in a managed care network. The process used under
current law may vary substantially from the provisions of the
bill.
The bill would increase the cost of the Employee Retirement
System (ERS) group insurance program substantially. Actuarial
analysis indicates that the bill would "increase the complexity
and resulting costs of administration" of managed care plans that
are not self-funded (for example, health maintenance
organizations). The ERS anticipates that ERS group insurance
costs would increase in the range of 1 percent to 1.5 percent.
ADDITIONAL COSTS TO THE STATE OF $7 MILLION TO $10 MILLION PER
YEAR ARE PROJECTED.
The Texas A&M University System estimates indicate that
implementation of the provisions of the bill would increase
health plan costs by 10 percent to 15 percent. Basic health plan
costs are projected to increase $3 million to $4.5 million in
1996. If the cost of HMO plans are included, THE PROJECTED TOTAL
HEALTH PLAN COST INCREASE WOULD BE $8 MILLION TO $12 MILLION.
The University of Texas System estimates indicate that
implementation of the provisions of the bill would result in an
INCREASE TO THE STATE FOR TOTAL HEALTH PLAN COST OF $4 MILLION IN
FY1996 INCREASING TO $38 MILLION IN FY2000.
The probable fiscal implication to the Department of Insurance of
implementing the provisions of the bill during each of the first
five years following passage is estimated as follows:
Fiscal Probable Cost Out Probable Revenue Change in
Year of Department of Gain to Department Number of State
Insurance of Insurance Employees from
Operating Operating FY 1995
Fund 036 Fund 036
GR Consolidated GR Consolidated
1996 $1,109,703 $110,000 16.0
1997 1,051,595 190,000 16.0
1998 808,730 80,000 10.0
1999 808,730 50,000 10.0
2000 808,730 30,000 10.0
Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.
The fiscal implication to units of local government cannot be
determined.
Source: Employee Retirement System, University of Texas System,
Texas A&M System, Department of
Insurance
LBB Staff: JK, RM, RN