SRC-JFA H.B. 3 75(R)   BILL ANALYSIS


Senate Research Center   H.B. 3
By: Berlanga (Sibley)
Economic Development
4-23-97
Engrossed


DIGEST 

Currently, approximately 1.3 million children under age 18 have no health
insurance.  Between 1980 and 1990, employer coverage for dependents in
Texas declined from 50 percent to 33 percent.  This bill would create the
nonprofit Texas Healthy Kids Corporation to establish a health benefits
program for children under the age of 18 who are not covered or not
adequately covered by health insurance or benefits plans.  Additionally,
this bill would authorize the corporation to receive private financial
donations, including donations from nonprofit hospitals.   

PURPOSE

As proposed, H.B. 3 establishes the Texas Healthy Kids Corporation and
provides for health benefit coverage for children of the State of Texas. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the initial board of directors of the
Texas Healthy Kid Corporation in SECTION 1 (Section 109.033(d)(1), Health
and Safety Code); to the comptroller in SECTION 1 (Section 109.153(b),
Health and Safety Code); to the board of directors of the Texas Healthy
Kids Corporation in SECTION 1 (Section 109.154(d), Health and Safety
Code); to the Texas Health and Human Services Commission in SECTION 2
(Section 154.182(c), Family Code); and to the commissioner of insurance in
SECTION 4 (Article 27.06, Insurance Code), of this bill.  

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title 2E, Health and Safety Code, by adding Chapter 109,
as follows:  

CHAPTER 109.  TEXAS HEALTHY KIDS CORPORATION
SUBCHAPTER A.  GENERAL PROVISIONS

Sec. 109.001.  DEFINITIONS.  Defines "board," "child," "corporation,"
"eligible coverage provider," "executive director," "program," and "Title
IV-D agency."  

Sec. 109.002.  TEXAS HEALTHY KIDS FUND.  Provides that the Texas healthy
kids fund (fund) is a fund outside the state treasury held by the Texas
Treasury Safekeeping Trust Company.  Sets forth the composition of the
fund.  Requires the comptroller to transfer to the fund money appropriated
to the fund from the state treasury.  Authorizes the comptroller to invest
money in the fund in the same manner as the comptroller may invest money
in the state treasury.  Requires the board of directors (board) of the
Texas Healthy Kids Corporation (corporation) to file with the comptroller
a verified copy of a board resolution that designates the authorized
representatives of the corporation who have authority to spend money in
the fund.  Requires the comptroller, in the first fiscal year for which
the fund does not receive a direct state appropriation of state money and
at the request of the board, to transfer the balance of the fund to one or
more depositories selected by the board as depositories for the
corporation.  Provides that the fund is abolished on the date a transfer
is made under this subsection. 

Sec. 109.003.  BIENNIAL REPORT.  Requires the corporation to submit a
written report to the governor, the lieutenant governor, the speaker of
the house of representatives, and the  commissioner of insurance
(commissioner) by January 1 of each odd-numbered year. Requires the report
to state the program's status and to include a statement of the
corporations's financial condition and an accounting for the corporation's
administrative expenses for the two years preceding the date of the
report.  Provides that the reporting requirement under this section only
applies during certain periods. 

Sec. 109.004.  IMMUNITY FROM LIABILITY.  Provides that Chapter 84, Civil
Practice and Remedies Code, applies to the corporation and an employee or
volunteer of the corporation.   

SUBCHAPTER B.  CORPORATE STRUCTURE

Sec. 109.031.  TEXAS HEALTHY KIDS CORPORATION; PURPOSE.  Provides that the
Texas Healthy Kids Corporation is created and has the powers that are
necessary and proper to carry out its duties.  Provides that the
corporation is a nonprofit corporation and shall comply with the Texas
Non-Profit Corporation Act (Article 1396-1.01 et seq., V.T.C.S.). Provides
that the primary purpose of the corporation is to provide health benefits
for primary and preventive health care for children.  Provides that the
corporation is not subject to the franchise tax imposed by Chapter 171,
Tax Code.  Requires the board to take any step necessary to maintain an
exemption from certain federal income taxes.   

Sec. 109.032.  BOARD OF DIRECTORS; PRESIDING OFFICER.  Requires the
corporation to operate subject to the general supervision of a board of
directors.  Provides that the board and the presiding officer of the board
are selected as provided by the articles of incorporation and bylaws of
the corporation, in accordance with the Texas Non-Profit Corporation Act
(Article 1396-1.01 et seq., V.T.C.S.).  Authorizes the board, if required
by the bylaws, to include certain persons as voting ex officio members.
Prohibits a member of the board from serving more than two terms.
Provides that a person is not eligible to serve on the board if the person
or the person's spouse is employed by, represents in any capacity, owns,
or controls any ownership interest in a certain business or organization.
Provides that a person is not eligible to serve on the board if the person
is or has been an adverse party in litigation against the board or
corporation. 

Sec. 109.033.  POWERS AND DUTIES OF BOARD; OVERSIGHT OF COMMISSIONER OF
INSURANCE.  Provides that the board is the oversight and governing entity
of the corporation and has any power necessary and proper to carry out its
duties under this chapter. Provides that the board has complete fiscal
control over the corporation and is responsible for all corporate
operations.  Authorizes the board to request and accept grants and gifts
of money, property, or services.  Authorizes the corporation to use a
grant or gift for any purpose of the corporation.  Authorizes the
corporation to use a donation made as community benefits by a hospital or
hospital system under Section 171.063(a), Tax Code, only to purchase
health benefits for certain children.   Requires the initial board to
submit to the commissioner for approval and may not implement before
receiving that approval the corporation's bylaws, plan of organization,
and any other standards adopted by the board; and the health benefit
program and health benefit plans established by the corporation under
Subchapter C. 

Sec. 109.034.  EXECUTIVE DIRECTOR.  Requires the board to employ an
executive director to help the board perform its duties.  Requires the
director to act on behalf of and subject to authorization and supervision
of the board to carry out the purposes of the corporation.  Requires the
corporation to pay the director a salary in an amount established by the
board.  Requires the director to make and file a surety bond in an amount
determined by the board for the faithful performance of the executive
director's duties and the proper safekeeping and disbursement of corporate
money. 

Sec. 109.035.  EMPLOYEES; CONSULTANTS.  Authorizes the director to employ
employees and retain consultants as necessary to administer the programs
of the corporation.  

Sec. 109.036.  PUBLIC INPUT.  Requires the board to develop and implement
policies that  provide the public with a reasonable opportunity to appear
before the board and to speak on any issue related to the corporation or
the program. 

Sec. 109.037.  OPEN MEETINGS; OPEN RECORDS.  Provides that the board and
the corporation are subject to the open meetings law, Chapter 551,
Government Code, and the open records law, Chapter 552, Government Code,
subject to Section 109.064, during certain periods.   

Sec. 109.038.  COOPERATION OF AND ASSISTANCE TO STATE AGENCIES. Requires a
health and human services agency, the Department of Insurance
(department), the Title IV-D agency, the board of directors of the risk
pool established under Article 3.77, Insurance Code, and the comptroller
to cooperate with the corporation to assist the corporation in performing
its duties.  Requires the corporation to work with the Title IV-D agency,
the Department of Human Services, and the Department of Health (TDH) to
facilitate the electronic exchange of information among the corporation
and the agencies that relate to certain individuals.  Requires the
corporation to work with the board of directors of the risk pool
established under Article 3.77, Insurance Code, to implement Section
109.067. 

Sec. 109.039.  AUDIT BY STATE AUDITOR.  Provides that the corporation is
subject to audit by the state auditor under Chapter 321, Government Code,
only during certain periods. Authorizes the audit to include a financial
audit and an economy and efficiency audit. 

SUBCHAPTER C.  HEALTH BENEFIT PROGRAM

Sec. 109.061.  HEALTH BENEFIT PROGRAM.  (a) Requires the corporation to
establish, develop, and promote a program to provide health benefits for
certain children.  

(b)  Authorizes the board to contract for or otherwise obtain third-party
administrative services for the corporation.   

(c)  Authorizes the corporation, in developing the  health benefit program
(program), to consult with TDH, appropriate professional organizations,
coverage providers, other agency officials, and consultants.  Requires the
corporation to consult with the Title IV-D agency, in matters relating to
coverage for children who are the subject of a medical child support order
and for whom the agency is providing enforcement services.   

(d)  Authorizes the corporation to establish group coverage plans for
children under the program in specified geographic regions of the state or
based on other criteria approved by the commissioner.   

(e)  Provides that the parent, managing conservator, or guardian of a
child, or another person sponsoring coverage for the child, is responsible
for premiums for coverage under the program and for applicable copayments,
coinsurance, or deductions, as determined by the corporation.  Authorizes
the corporation to develop a premium structure that varies according to
ability to pay and to require, in accordance with the premium structure,
that the parent, conservator, guardian, or sponsor pay the full cost of
the child's coverage. 

(f)  Authorizes the corporation to require that the parent, managing
conservator, or guardian of a child, or another person sponsoring coverage
for the child, pay to the corporation a reasonable enrollment fee, in an
amount set by the corporation, before the child is enrolled in coverage
under the program. 

(g)  Provides that the health benefit coverage provided under the
corporation's program is secondary to any other available private coverage
covering a child.  Requires the corporation to ensure that benefits
provided by the program are the payor of last resort with respect to
private coverage covering a child. 

(h)  Requires the corporation, in developing the eligibility criteria
under Subsection (a)(3), to consider the impact of the eligibility
criteria on the availability of other health benefit  plan coverage for
children.  Requires the corporation to restrict eligibility for coverage
under the program or impose a waiting  period or other appropriate
restriction to minimize any adverse impact on the availability of other
health benefit plan coverage.  

(i)  Authorizes the board to develop a marketing plan under which each
participating eligible coverage provider is required to market the
program.  Authorizes the corporation or eligible coverage providers to
publicize the corporation and the general nature of the program.  Requires
a direct sale or solicitation of a health benefit plan offered through the
program to be done in accordance with the Insurance Code and other
insurance laws of this state. 

Sec. 109.062.  CORPORATE OPERATIONS; LICENSING REQUIREMENTS.  Provides
that the corporation is not an insurer and may not self-insure or
self-fund the coverage provided through the program.  Provides that the
board and employees of the corporation are not agents of an insurer.
Provides that the corporation, the board, and the employees of the
corporation are not subject to any licensing requirement imposed under the
Insurance Code or another insurance law of this state.  Requires the
corporation to use prudent business practice in the procurement of goods
and services.  Provides that a law governing the procurement of goods or
services by a state agency applies only during a certain period. 

Sec. 109.063.  OPERATIONS OF ELIGIBLE COVERAGE PROVIDER.  Requires an
eligible coverage provider to meet certain conditions.  Provides that a
health benefit plan provider under the program is not subject to a law
that requires coverage or the offer of coverage of a health care service
or benefit.  Provides that an eligible coverage provider is not subject to
certain taxes with respect to money received for coverage provided under
this chapter.  Prohibits the participation criteria for authorized
insurers, health service organizations, health maintenance organizations,
and other entities that provide coverage under the health benefit program
from requiring that an eligible coverage provider provide benefits in a
school-based clinic.  

Sec. 109.064.  ACCESS TO RECORDS; CONFIDENTIALITY.  Authorizes the
corporation to obtain the medical records of and other information
relating to a child covered by the program or applying to be covered by
the program on receipt of the informed written consent of the child's
parent, managing conservator, or guardian.  Provides that information in
the possession of the corporation that identifies an individual is
confidential and exempt from disclosure and discovery in a civil action.
Prohibits the corporation or an employee or agent of the corporation from
releasing confidential information to any person without the written
consent of a parent, managing conservator, or guardian of the
participating child. 

Sec. 109.065.  GRIEVANCES AND APPEALS.  Requires the corporation to
develop a plan for the receipt and consideration of complaints regarding
participating eligible coverage providers to ensure appropriate delivery
of health care services to participating children and to ensure that
eligible coverage providers comply with any applicable complaint procedure
imposed by law or the requirements of the corporation.   

Sec. 109.066.  TEXAS DEPARTMENT OF HEALTH PROGRAMS.  Authorizes TDH to use
appropriated funds to purchase coverage under a health benefit plan
provided through the program for children who are eligible for coverage
for the program under certain conditions.  Prohibits services provided to
children under a federally funded or state-funded program administered by
TDH from being reduced or eliminated because some or all of the services
are provided through the program or otherwise provided because of the
establishment of the corporation or the program. 

Sec. 109.067.  AVAILABILITY OF RISK POOL MANAGEMENT.  Requires the
corporation to notify the parent, managing conservator, or guardian of a
child who applies for coverage through the program of the availability of
coverage from the risk pool established under Article 3.77, Insurance
Code.  

Sec. 109.068.  PROGRAM NOT AN ENTITLEMENT.  Provides that this chapter
does not  establish an entitlement to health benefits provided through the
corporation or any other entitlement.  

SUBCHAPTER D.  COVERAGE UNDER ORDER OF MEDICAL
SUPPORT FOR CHILD    

Sec. 109.101.  APPLICATION.  Requires a party ordered under Chapter 154,
Family Code, to apply for coverage for a child under the program to
provide to the corporation a copy of the order rendered under Chapter 154;
and the name and address of the obligor's employer.  
Sec. 109.102.  DUTIES OF CORPORATION OR DESIGNEE OF CORPORATION. Requires
the corporation or the designee of the corporation to review an applicant
and, if the corporation or designee finds that the child is eligible for
coverage under the program, to issue coverage to the child in accordance
with the program; and to notify the obligor's employer in accordance with
Subsection (b).  Sets forth the required contents of the notice provided
under Subsection (a)(2).  Requires the corporation or the corporation's
designee to notify the employer of an obligor of any increase in the
amount to be paid for coverage of the child under the program.   

Sec. 109.103.  DUTY OF EMPLOYER.  Requires an employer who receives notice
under Section 109.102 to withhold an appropriate amount from the obligor's
earnings for the required payment and remit the amount as instructed on
the notice.  Provides that an employer who fails to withhold or remit
payments as required by this section or who discriminates in hiring or
employment on the basis of a medical support order is subject to the
penalties and fines imposed under Subchapter C, Chapter 158, Family Code.  

SUBCHAPTER E.  ELIGIBILITY OF CERTAIN CHILDREN;
STABILIZATION FUND

Sec. 109.151.  TERMINATION FOR FAILURE TO PAY PREMIUMS.  Requires the
corporation to terminate the coverage of a child for failure to pay a
premium as required under Section 109.061(e).   

Sec. 109.152.  PREMIUM STABILIZATION REVOLVING ACCOUNT.  Provides that the
premium stabilization revolving account (account) is an account within the
fund.  Sets forth the composition of the account.   

Sec. 109.153.  FEE; DEPOSIT TO ACCOUNT.  Requires the corporation to
charge for each child covered under the program a reasonable premium
stabilization revolving account fee, not to exceed $5 each month.
Requires the corporation to remit money collected under this section to
the comptroller, in accordance with rules adopted by the comptroller, for
deposit to the credit of the account.   

Sec. 109.154.  USE OF MONEY IN ACCOUNT.  Authorizes money in the account
to be used by the corporation only to pay a premium for coverage provided
through the program for a child for whom a premium is not paid in
accordance with Section 109.061(e).  Prohibits a premium from being paid
for a child who is covered by a health benefit plan other than the plan
offered by the corporation.  Requires the corporation to determine the
period for which premiums may be paid from the fund and the circumstances
under which the premiums may be paid.  Provides that the parent, managing
conservator, or guardian of a child for whom a premium is paid from the
account, or another person sponsoring coverage for the child, remains
responsible for reimbursing the account for the premium paid.  Provides
that the coverage for the child is subject to termination, in accordance
with criteria adopted by the board, if the parent, managing conservator,
guardian, or sponsor fails to reimburse the account as required by this
subsection.  Requires the corporation to remit money collected under this
subsection to the comptroller for deposit to the credit of the account.  

SECTION 2. Amends Section 154.182, Family Code, by amending Subsection (b)
and by adding Subsection (c), as follows:   
 
(b)  Requires a court, in determining the manner in which health insurance
for the child is to be ordered, to render its order in accordance with the
following priorities, among others, unless a party shows good cause why a
particular order would not be in the best interest of the child:  if
health insurance is not available for the child under Subdivision (1),
(2), or (3), the court shall order the obligor to apply for coverage
through the corporation established under Chapter 109, Health and Safety
Code; or if health coverage is not available for the child under
Subdivision (1), (2), (3), or (4), the court shall order the obligor to
pay the obligee a reasonable amount each month as medical support for the
child to be withheld from earnings under Chapter 158.  Makes conforming
changes.    

(c)  Requires a court, in establishing the amount of additional medical
child support under Subsection (b)(5), to presume that $38 each month is
reasonable amount for a child but may order a greater or lesser amount as
appropriate under the circumstances.  Authorizes the Health and Human
Services Commission to promulgate guidelines for the dollar amounts of
medical support that the court may presumptively apply in circumstances in
which the obligor is responsible for medical child support for more than
one child.   

SECTION 3. Amends Section 171.063(a), Tax Code, to authorize a requirement
that a nonprofit hospital provide charity care and community benefits
under this section to be satisfied by a donation of money to the
corporation established by Chapter 109, Health and Safety Code, provided
that the money is donated to be used for a purpose described by Section
109.033(c), Health and Safety Code; and no more than 10 percent of the
charity care required under any provision of this subsection may be
satisfied by the donation.   

SECTION 4. Amends the Insurance Code, by adding Chapter 27, as follows:  

CHAPTER 27.  HEALTH BENEFIT PLANS FOR CHILDREN

Art. 27.01.  DEFINITION.  Defines "health benefit plan."  

Art. 27.02.  SCOPE OF CHAPTER.  Provides that this chapter applies to
certain health benefit plans.   

Art. 27.03.  CHILDREN'S HEALTH BENEFIT PLAN.  Authorizes the issuer of a
health benefit plan to offer a children's health benefit plan in
accordance with this chapter. Authorizes the health benefit plan to
provide coverage only to children younger than 18 years of age.  Prohibits
an issuer of a health benefit plan from offering a children's health
benefit plan under this chapter unless the plan's structure and the
benefits offered under the plan have been approved by the commissioner. 

Art. 27.04.  MANDATED BENEFIT PROVISIONS INAPPLICABLE.  Provides that a
children's health benefit plan is not subject to a law that requires
coverage or the offer of coverage of a health care service or benefit.   

Art. 27.05.  EXEMPTION FROM PREMIUM TAX.  Provides that the issuer of a
children's health benefit plan is not subject to a certain tax.  

Art. 27.06.  RULES.  Authorizes the commissioner to adopt rules to
implement this chapter.  
SECTION 5.  (a)  Sets forth the initial compositions of the board,
notwithstanding Section 109.032, Health and Safety Code.   

(b)  Requires the governor to appoint the members of the board appointed
under Subsection (a)(1) of this section as soon as practical after the
effective date of this Act.  Provides that the terms of those members
expire on September 1, 1999. 

(c)  Requires the governor, on expiration of the terms of the initial
appointed members of the board, to appoint four members for terms expiring
September 1, 2001, and two of the formerly appointed positions shall be
filled as provided by the articles and bylaws of the  corporation.   

(d)  Requires the governor, on expiration of the terms of the four members
appointed under Subsection (c), to appoint two members to serve terms
expiring September 1, 2003. Requires the two other positions of the
formerly appointed members to be filled as provided by the articles and
bylaws of the corporation.  

(e)  Requires all members of the board, after September 1, 2003, to be
selected as provided by Section 109.032, Health and Safety Code, as added
by this Act.  

(f)  Provides that a person is not eligible for appointment by the
governor to the board under this section if the person does not satisfy
the requirements of Section 109.032, Health and Safety Code, as added by
this Act.  

(g)  Requires the members of the board to annually elect a member to serve
as the presiding officer of the board. 

(h)  Provides that the members of the board appointed by the governor
serving under this section serve without compensation, but are entitled to
reimbursement of their travel expenses as provided for in the General
Appropriations Act for state board or commission members.  Authorizes
money appropriated to the department, the Health and Human Services
Commission, or the Title IV-D agency to be spent, consistent with the
General Appropriations Act, in connection with the work or expenses of the
ex officio members of the initial board. 

(i)  Provides that this section expires September 1, 2003.  

SECTION 6. (a)  Requires the commissioner, acting as incorporator, by the
60th day after the effective date of this Act, to take the steps necessary
to create the Texas Healthy Kids Corporation as a nonprofit corporation
under the Texas Non-Profit Corporation Act (Article 1396-1.01 et seq.,
Vernon's Texas  Civil Statutes).     

(b)  Requires the commissioner, by the 90th day after the effective date
of this Act, acting on behalf of the corporation, to employ an acting
executive director for the corporation. Authorizes the acting executive
director to develop a proposed business plan for the corporation; to
solicit alternative funding for the corporation and for the health benefit
plan program to be established by the corporation; and to develop, to the
extent possible, a proposed health benefit plan program for the
consideration of the board.   

(c)  Authorizes the commissioner, on behalf of the corporation, to accept
grants and gifts of money, property, or services to assist the acting
executive director appointed under Subsection (b) of this section in
carrying out the acting executive director's powers.  Provides that the
commissioner's authority under this section expires on the date all of the
appointed members of the board of the corporation have been appointed by
the governor and have qualified for office. 

(d)  Provides that the acting executive director appointed under this
section serves until the earlier of the date the acting executive director
is dismissed by the commissioner; the date the acting executive director
is dismissed by the board of the corporation; or the date the board of the
corporation employs an executive director for the corporation. 

(e)  Prohibits the commissioner from employing an acting executive
director on or after the date all of the appointed members of the board of
the corporation have been appointed and have qualified for office.   

SECTION 7. (a)  Requires the corporation to offer a health benefit plan
under Chapter 109, Health and Safety Code, as added by this Act, by the
first anniversary of the effective date of this Act.  

(b)  Requires the board of the corporation, by the date the corporation
first offers a health  benefit plan in accordance with Subsection (a), to
establish general administrative and accounting procedures for the
corporation; to develop the design and benefits structure of any health
benefit plan that may be offered by the corporation through eligible
coverage providers in accordance with Chapter 109, Health and Safety Code,
as added by this Act; and to develop a plan for the receipt and
consideration of complaints as required by Section 109.065, Health and
Safety Code.  

(c)  Requires the board of the corporation to determine whether it is
feasible, considering the resources available, to initially offer the
health benefit plan required under Chapter 109, Health and Safety Code, as
added by this Act, in each region of the state.  Requires the board, under
certain conditions, to develop and the corporation to implement a schedule
to stagger implementation of the health benefit program in different
regions of the state. 

SECTION 8. Makes application of Chapter 27, Insurance Code, as added by
this Act, prospective to January 1, 1998.  

SECTION 9. Prohibits a court from ordering that coverage be provided to a
child through the corporation under Section 154.182, Family Code, as
amended by this Act, before the date that the corporation first offers
coverage under a health benefit plan. 

SECTION 10. Requires the Title IV-D agency, as soon as practicable after
the effective date of this Act, to seek the modification of child support
orders that are enforced by the agency and to which Section 154.182(b)(5),
Family Code, as added by this Act, applies to obtain additional medical
child support under that subdivision.   

SECTION 11. (a)  Effective date:  upon passage. 

(b)  Effective date of Section 171.063(a), Tax Code, as amended by this
Act:  January 1, 1998.   

SECTION 12. Emergency clause.