LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 1, 1997
TO: Honorable John T. Smithee, Chair IN RE: Senate Bill No. 387, As Engrossed
Committee on Insurance By: Harris/et al.
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on SB387 ( Relating
to the creation of a rating system and consumer report cards
for the comparison of health care plans.) this office has detemined
the following:
Biennial Net Impact to General Revenue Funds by SB387-As Engrossed
Implementing the provisions of the bill would result in a net
positive impact of $489,000 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
This bill would add Article 1.35A-1 to Chapter 1 of the Insurance
Code to authorize the Office of the Public Insurance Counsel
(OPIC) to create a rating system to compare and evaluate the
quality of health care provided by health maintenance organizations
(HMOs). This bill would allow OPIC to enter into contracts
as necessary to create this rating system.
This bill would
authorize OPIC to develop a consumer report card that identifies
and compares each HMO and preferred provider that offers a health
benefit plan in Texas. This report card would be updated annually
and OPIC would be authorized to charge a reasonable fee for
distribution of the report card, not to exceed the cost of producing
the consumer report card. Implementing the provisions of this
article would result in costs to OPIC of $113,000 in fiscal
year 1998, and $68,000 in fiscal years 1999 though 2002. This
includes $68,000 for the salaries and benefits of two research
specialists, and $125,000 for professional fees for contracting
with vendors to administer surveys. Printing and postage would
cost $45,000 per fiscal year; since these costs would be recouped
at the time a person requests a report, there would be a one
year lag between accruing and recouping these costs. Therefore,
the $45,000 is shown as a cost for fiscal year 1998 only.
Article
1.35B(a) of the Insurance Code would be amended to allow costs
associated with the administration of OPIC's duties under Article
1.35A-1 to be covered by the assessment currently collected
by the Comptroller to defray the costs of operating OPIC. Article
1.35B(a) would be amended to increase the assessment from 3.0
cents to 5.7 cents per initial life, accident, health, and HMO
policy written. This would create a gain to General Revenue
of $328,000 in fiscal year 1998, $342,000 in fiscal year 1999,
$357,000 in fiscal year 2000, $372,000 in fiscal year 2001,
and $389,000 in fiscal year 2002.
Methodolgy
Fiscal impact associated with the cost of producing the managed
care report card were estimated based on the assumption that
OPIC would complete the first report card by September 1, 1998.
OPIC based professional fees on the cost of administering surveys
to 62 managed care providers at approximately $2,000 each.
Printing costs were estimated based on the costs associated
with producing 50,000 copies of a 25 page document; postage
costs were estimated based on distributing 15,000 reports by
mail.
Gains to the General Revenue fund were based on the
fiscal impact of raising the OPIC assessment to 5.7 cents from
3.0 cents per initial life, accident, health, and HMO policies.
These gains were calculated by applying the amount of assessment
increase times the projected number of initial policies, based
on historical data and the Comptroller's 1998-99 Biennial Revenue
Estimate. Because the act takes effect September 1, 1997, these
gains were based on the assumption that the assessment increase
would apply to calendar year 1997 policies, whose assessment
would fall due March 1, 1998. If the intent of the bill is
to have the assessment apply only to policies with the initial
premium paid after January 1, 1998, the impact for fiscal 1998
would be reduced to zero. The fiscal impact for succeeding
years would remain as calculated.
Five Year Impact:
Fiscal Year Probable Probable Change in Number
Savings/(Cost) Savings/(Cost) of State
from General from General Employees from
Revenue Fund Revenue Fund FY 1997
0001 0001
1998 ($113,000) $328,000 2.0
1998 (68,000) 342,000 2.0
2000 (68,000) 357,000 2.0
2001 (68,000) 372,000 2.0
2002 (68,000) 389,000 2.0
Net Impact on General Revenue Related Funds: