LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
February 18, 1997
TO: Honorable Hugo Berlanga, Chair IN RE: House Bill No. 3
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-As Introduced
Implementing the provisions of the bill would result in a net
negative impact of $(4,782,385) 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 in the Comptroller's Office. The fund would include money
appropriated to the fund. 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 Comptroller would be authorized to draw warrants from the
fund on receipt of a voucher signed by an authorized representative
of the corporation.
The bill would require the appointment
of a six-member board by the Governor with the consent of the
Senate. The commissioners of insurance and health and human
services would also serve on the board as nonvoting ex-officio
members. The board and corporation would not be subject to
open records or open meetings laws.
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 corporation would be required to develop the health
benefit program, including its design, actuarial, and benefits
structure. In addition, the corporation would be responsible
for all aspects of the insurance structure, including specifying
eligibility criteria, negotiating premiums, contracting for
the provision of coverage, and collecting from parents and absent
parents the premium for the children covered. The corporation
and its employees would have statutory immunity from liability
for good faith acts or errors by coverage providers or medical
providers. The corporation would act as a clearinghouse matching
eligible children with insurance companies, and providing payment
or partial payment of premiums under guidelines to be established.
The bill provides for withholding orders in child support cases
to fund premiums where appropriate.
The bill authorizes
the corporation to receive state funds but does not specify
appropriation amounts. The bill also authorizes the non-profit
corporation to accept grants and gifts of money, property, or
services.
Fiscal Analysis
The bill would partially 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, the
mechanism for collection and distribution of medical support
does not use the existing administrative structure and would
establish another payment system. In addition, the lack of
a requirement to exchange information with the Medicaid operating
agencies makes third-party recoveries less certain and cannot
be estimated.
The state would incur costs initially to
adapt the Office of the Attorney General's computer system,
to cover start up costs for the corporation, and to pay for
administrative staff. 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 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.
Fiscal
implications for the Office of the Attorney General:
1)
The Child Support Division would make changes to its electronically
generated forms to create an optional page that would include
language for the obligor to purchase health insurance through
THKC.
2) Management reports would be created to measure
the number of Title IV-D (AFDC related) children referred to
THKC for insurance coverage.
3) The financial component
of the new child support computer system would be modified by
adding a unique THKC description in the support order detail
screens and to create additional edits to the obligation entry
screens.
4) It is assumed that the costs to modify the OAG
system would be incurred in fiscal year 1997.
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.
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Six Year Impact:
Fiscal Year Probable Probable Probable Revenue Probable Change in Number
Savings/(Cost) Savings/(Cost) Gain/(Loss) from Savings/(Cost) of State
from Texas from General Other - from Federal Funds Employees from
Department of Revenue Fund Administrative FY 1997
Insurance Fees
Operating
Account/
GR-Dedicated
0036 0001 OTHER-OTH 0555
1997 $0 $0 $0 ($23,070) 0.0
1997 (159,116) (3,020,500) 0 3.0
1999 (1,750,000) 562,608 0.0
2000 (1,500,000) 1,589,768 0.0
2001 (1,500,000) 2,110,480 0.0
2002 0 2,701,739
Fiscal Year Probable
Savings/(Cost)
from General
Revenue Fund :
Retained Child
Support
Collections
0001
1997
1998
1999
2000
2001
2002
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
1997 ($11,885)
1998 (3,020,500)
1999 (1,750,000)
2000 (1,500,000)
2001 (1,500,000)
2002 0
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: 454 Department of Insurance
501 Department of Health
529 Health and Human Services Commission
324 Department of Human Services
302 Office of the Attorney General
324 Department of Human Services
304 Comptroller of Public Accounts
LBB Staff: JK ,BB ,AZ