LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 15, 1997
TO: Honorable David Sibley, Chair IN RE: House Bill No. 219, As Engrossed
Committee on Economic Development By: Brimer
Senate
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB219 ( Relating
to the licensing of agents for health maintenance organizations.)
this office has detemined the following:
Biennial Net Impact to General Revenue Funds by HB219-As Engrossed
Implementing the provisions of the bill would result in a net
impact of $0 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.
Fiscal Analysis
Article 21.07-1 of the Insurance Code would be amended to: redefine
"agent" to include those representing health maintenance organizations
(HMOs); include a member employed by an HMO to be included on
the licensing Advisory Board; and, include HMOs in penalty for
violations of licensor requirements. This bill would combine
the license authorities for Legal Reserve Life Agents and HMO
agents, and applies to licenses issued or renewed on or after
January 1, 1998. This bill would phase out HMO licenses by
January 1, 2000 by repealing Articles 20A.15 and 20A.15A of
the Insurance Code.
TDI's operating fund (Fund 036) would
experience a one-time revenue gain of $285,500 in fiscal year
1998, due to approximately 5,710 HMO agents applying and paying
for the Legal Reserve Life License. This fund also would experience
a revenue loss of $35,760 per year, since approximately 745
agents hold both a Legal Reserve Life License and an HMO License.
The bill would combine both licenses, which would require these
agents to renew only one license.
Methodolgy
As of the end of fiscal year 1996, the total number of HMO agents
in Texas was 6,455; 5,710 held only an HMO license and 745 held
both a Legal Reserve Life License and an HMO License. Revenue
gains and losses to TDI Fund 036 were based on the following
assumptions:
(1) the 5,710 agents who hold an HMO License
would be required to apply and pay for a Legal Reserve Life
License at a cost of $50 per license (5,710 x $50 = $285,500);
and,
(2) the 745 agents who hold both a Legal Reserve Life
License and an HMO License would renew only one, at a loss to
Fund 036 of $48 per license not renewed (745 x $48 = $35,760).
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 Revenue Probable Revenue
Gain/(Loss) from Gain/(Loss) from
Texas Department Texas Department
of Insurance of Insurance
Operating Operating
Account/ Account/
GR-Dedicated GR-Dedicated
0036 0036
1998 ($35,760) $285,500
1998 (35,760)
2000 (35,760)
2001 (35,760)
2002 (35,760)
Net Impact on General Revenue Related Funds:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $0
1999 0
2000 0
2001 0
2002 0
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect.
No fiscal implication to units of local government is anticipated.
Source: Agencies: 454 Department of Insurance
LBB Staff: JK ,TH ,BK