LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
March 11, 1997
TO: Honorable Hugo Berlanga, Chair IN RE: House Bill No. 3, Committee Report 1st House, Substituted
Committee on Public Health By: Berlanga
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB3 ( Relating
to establishing the Texas Healthy Kids Corporation to increase
access to health care for children.) this office has detemined
the following:
Biennial Net Impact to General Revenue Funds by HB3-Committee Report 1st House, Substituted
Implementing the provisions of the bill would result in a net
positive impact of $207,500 to General Revenue Related Funds
through the biennium ending August 31, 1999.
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 Health and Safety Code
to establish the Texas Healthy Kids Corporation, a non-profit
corporation to increase access to health insurance for children.
The bill would establish a new, dedicated Texas Healthy Kids
Fund outside the state treasury held by the Texas Treasury Safekeeping
Trust Company. The bill would establish a new, dedicated Premium
Stabilization Revolving Account within the fund. The fund would
include money contributed by the provisions of the bill, money
appropriated by the Legislature, and any gifts accepted by the
corporation s board of directors. The Comptroller would be required
to transfer the appropriated amounts to the fund from the State
Treasury and would be authorized to invest money in this fund.
The account would be used to pay a premium for a covered
child for whom a premium was not paid. The corporation would
determine the period for which premiums could be paid from the
fund and the circumstances under which the premium could be
paid. The corporation would charge parents a reasonable Premium
Stabilization Revolving Account fee to defray expenses.
The
corporation would be required to submit a written report to
the Governor, Lieutenant Governor, Speaker of the House of Representatives,
and Commissioner of Insurance not later than January 1 of each
odd year. The report would state the program s status, include
a statement of the corporation s financial condition, and provide
an accounting of the corporation s administrative expenses for
the two years preceding the date of the report.
The bill
would require the appointment of a six-member board by the Governor
with the consent of the Senate. The director of the Title IV-D
agency and commissioners of insurance and health and human services
would serve on the board as nonvoting ex-officio members.
The
bill would require the Commissioner of Insurance to take initial
steps to create the corporation by November 1, 1997 and employ
an acting executive director by December 1, 1997 or until the
board is appointed.
The bill would authorize the Texas
Healthy Kids Corporation to establish an insurance plan for
children that:
* are not otherwise covered by health insurance
or
* are not adequately covered by health insurance or
*
are not covered by insurance for a specified medical condition.
The
bill would authorize the corporation to:
* develop the design,
actuarial, and benefits of the insurance plan for kids
* determine
eligibility criteria that children and their families must meet
*
develop participation criteria for authorized insurers, HMOs,
etc.
* develop and implement a public awareness program to
educate the public about the insurance
program
* develop
participation objectives for the insurance program and develop
a plan to require any
participating provider to market
the program
* negotiate premiums for coverage, applicable
copayments, coinsurance, or deductibles
* contract for the
provision of health benefits coverage under the program
The
corporation would be required to offer a health benefit plan
no later than one year after the effective date of this bill.
In the interim, if health insurance was not available for
a child and the child s right to medical support was assigned
to the state because the child received benefits under the state
Medicaid program, the court would be required to order the non-custodial
parent to buy a monthly medical support payment, to be withheld
from earnings. Under the provisions of the bill, the court
would assume $38 each month to be a reasonable amount, but the
court could order a larger or smaller amount as it deemed appropriate
under the circumstances. The bill would require the Title IV-D
agency, as soon as is practicable, to seek modification of child
support orders for relevant cases.
The corporation would
be allowed to use a donation made as community benefits by a
hospital or hospital system only to purchase health benefits
for children if the child resides in the area served by the
hospital (or district) and if the child s family income is less
than 200 percent of the federal poverty limit.
Fiscal Analysis
The bill would implement the Texas Performance Review (TPR)
recommendation HHS1 in Disturbing the Peace: The Challenge
of Change in Texas Government by requiring a parent of a child
under a child support order to apply for health coverage through
the benefit plan the corporation would provide. However, this
bill would allow the corporation to set eligibility requirements
that children and families would be required to meet to participate
in the program, while the TPR recommendations would limit coverage
to those children whose non-custodial parent had an income under
250 percent of the federal poverty level and would require the
entity to limit health plan benefits to ensure the affordability
of the plan. The bill would allow participation in the Stabilization
Revolving Fund to all children eligible for coverage under the
Texas Healthy Kids Corporation rules while the TPR recommendations
would have limited health insurance premium payments to only
those children whose non-custodial parent is unable to make
child-support payments for a short period of time. The estimate
assumes that the Child Support Retained Collection Account in
the General Revenue Fund would provide startup money for the
Stabilization Revolving Fund Account to pay for insurance costs
for Title IV-D children. In this estimate the cost to the Child
Support Retained Collection Account was based on the amount
needed to cover missed health insurance premiums of children
on medical support orders under the Title IV-D program. (Note:
The Comptroller revised this estimate on March 5, 1997.) The
additional costs to pay insurance for children determined to
be eligible by the corporation cannot be estimated at this time.
The
bill would not require a health benefit plan to be in place
until one year after the bill s effective date. In the interim,
the bill would require employers to withhold monthly medical
support payments to cover insurance premiums for children whose
non-custodial parents have no health insurance for the child.
This estimate assumes that the court would order a $38 monthly
payment per child. The estimate of Medicaid savings to the
state and federal government is based on the number of paying
cases and children that the Office of the Attorney General estimates
would be established monthly, beginning October 1997.
The
state would incur costs related to the start up of the corporation
and to pay for administrative staff. Although certain requirements
of the bill would affect the Department of Health, Department
of Human Services, Health and Human Services Commission, and
the Office of the Attorney General, it is assumed that these
responsibilities can be accomplished within existing resources.
It is anticipated that by 2002 the corporation will generate
enough revenue to no longer need state funds.
Methodolgy
The bill will have fiscal implications for the Department of
Insurance in the first year of the corporation. The estimates
are built upon these assumptions:
1) The board of directors
for the Texas Healthy Kids Corporation would employ a permanent
executive director no later than August 31, 1998. Funding for
an acting director would be no longer required in fiscal year
1999. (If a permanent executive director is not in place by
August 31, 1998, additional funding for that salary would be
necessary.)
2) The Commissioner of Insurance would allocate
existing TDI office space and other equipment such as personal
computers, printers, and desks for use by the acting executive
director and support staff for a period of one year or until
permanent staff is hired (whichever comes first).
3) The Texas
Healthy Kids Corporation would be fully operational and adequately
funded by September 1, 1998. Therefore, salaries for the acting
director, insurance technician and administrative technician
would not be funded by TDI after fiscal year 1998.
Start
up funding for the Texas Healthy Kids Corporation:
1) It
was assumed that start up funding would be needed in the 1998-99
biennium for the design of a cash system; design of an enrollment
system; staffing; overhead costs; advertising and marketing;
and actuarial/legal expertise. The fiscal note assumes that
the state would provide funding for these initial costs.
2) In
the subsequent years of 2000 and 2001, it was assumed that the
state would continue to fund costs of $1.5 million each year
for staff, overhead, advertising/ marketing, and actuarial/legal
expertise.
3) It was assumed that the corporation would externalize
some of the costs to the vendors as well as begin earning income
from administrative fees related to the premiums in 1999. By
2002, the corporation would not receive state support for its
operations.
Savings Estimated by the Comptroller of
Public Accounts:
1) According to estimates provided by the
Comptroller of Public Accounts, the stabilization fund is initiated
in fiscal year 1999 with approximately 39,000 children. Subsequent
years add about 15,000 children in fiscal year 2000 and 10,000
each year thereafter. The Comptroller notes that the number
of children is lower than the Attorney General estimates for
additional nonpaying cases.
2) The Comptroller estimates of
savings to the Medicaid program in general revenue funds and
matching federal funds are based upon the Office of Attorney
General estimates of 1,350 paying child support cases per month
with 1.25 Medicaid eligible children per case to be worked each
year.
3) Estimates of savings provided by the Comptroller of
Public Accounts are for Title IV-D children only.
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable (Cost) Probable (Cost) Probable (Cost) Probable Revenue Change in Number
from Texas from General from General Gain from Other of State
Department of Revenue Fund Revenue Fund: - Administrative Employees from
Insurance Child Support Fees FY 1997
Operating Retained
Account/ Collection Account
GR-Dedicated
0036 0001 0001 OTHER-OTH
1998 ($159,116) ($3,020,500) $0 $0 3.0
1998 0 (1,750,000) (1,747,000) 562,608 0.0
2000 0 (1,500,000) (701,500) 1,589,768 0.0
2001 0 (1,500,000) (481,750) 2,110,480 0.0
2002 0 0 (492,000) 2,701,739 0.0
Fiscal Year Probable Savings Probable Savings
from General from Federal Funds
Revenue Fund
0001 0555
1998 $1,608,000 $2,623,000
1999 5,117,000 8,349,000
2000 8,626,000 14,074,000
2001 12,135,000 19,799,000
2002 15,644,000 25,524,000
Net Impact on General Revenue Related Funds:
The probable fiscal implication to General Revenue related funds
during each of the first five years is estimated as follows:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 ($1,412,500)
1999 1,620,000
2000 6,424,500
2001 10,153,250
2002 15,152,000
No significant fiscal implication to units of local government
is anticipated. However, some local governments may choose to
purchase health care coverage through the corporation.
Source: Agencies:
302 Office of the Attorney General
304 Comptroller of Public Accounts
324 Department of Human Services
454 Department of Insurance
501 Department of Health
529 Health and Human Services Commission
LBB Staff: JK ,BB