LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
March 30, 1999
TO: Honorable Patricia Gray, Chair, House Committee on Public
Health
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB445 by Moncrief (Relating to a child health plan for
certain low-income children.), As Engrossed
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB445, As Engrossed: negative impact of $(119,993,215) through *
* the biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
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* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(20,521,703) *
* 2001 (99,471,512) *
* 2002 (152,618,827) *
* 2003 (165,908,884) *
* 2004 (171,706,335) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Change in Number of *
* Year Savings/(Cost) from Savings/(Cost) from State Employees from *
* General Revenue Fund Federal Funds FY 1999 *
* 0001 0555 *
* 2000 $(20,521,703) $(18,605,450) 90.0 *
* 2001 (99,471,512) (226,109,609) 190.1 *
* 2002 (152,618,827) (359,813,268) 281.1 *
* 2003 (165,908,884) (375,290,958) 299.5 *
* 2004 (171,706,335) (392,571,748) 302.5 *
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Technology Impact
Technology costs, including personal computers, systems changes and
staffing, are included in the estimates above.
Fiscal Analysis
The bill would assign responsibility for developing and overseeing the
implementation of a child health program that would qualify for federal
Title XXI funding (Children's Health Insurance Program, or CHIP) to the
Health and Human Services Commission (HHSC). The Texas Department of
Health (TDH) would be responsible for administering the plan. The
Department of Human Services (DHS) would be responsible for implementing
eligibility determination and coordinating with the Medicaid program.
Alternatively, HHSC could opt to contract with a third party
administrator or the Texas Healthy Kids Corporation to perform tasks that
would otherwise be performed by TDH and/or DHS. Under this option, the
HHSC could use appropriated funds to purchase CHIP health insurance
coverage provided through the Texas Healthy Kids Corporation.
Income eligibility would be set at 200 percent of the federal poverty
level for children between birth and through 10 years of age and at 150
percent of the federal poverty level for children ages 11 through 18
years of age. Income eligibility for the older group of children could
be increased by the HHSC commissioner up to 200 percent of the federal
poverty level if adequate funding exists and appropriate documentation
is provided to the Legislative Budget Board and the Governor's Office of
Budget and Planning. An additional provision would require that the
HHSC commissioner adjust the income eligibility downwards for children
ages 8 through 10 if available funds were insufficient to maintain the
higher level. If this adjustment is implemented, the bill requires that
coverage for currently insured children be maintained.
Methodology
The Health and Human Services Commission estimates included above assume
that income eligibility for the 11 through 18 year old children would be
adjusted to 200 percent of the federal poverty level, the maximum
authorized under this bill and federal law. If eligibility for the older
children was held at a lower income level, the fiscal impact would be
reduced. The difference for the 2000-01 biennium if the older children
were held at 150 percent of federal poverty level would be $8.5 million
less in General Revenue and $32.1 million in All Funds. The estimates
are for "Phase II" only and build upon the current CHIP program which
covers children through age 18 in households up to 100 percent of the
federal poverty level.
CHIP Services and Administration (NOTE: Based on updated HHSC
adminstrative cost estimates)
Estimates above include HHSC estimates of projected CHIP-eligible
children, based on the Census Bureau's Current Population Survey (1993,
1994, 1995) data and assume a participation rate of 65 to 67 percent of
eligible children and some cost sharing above 150 percent of the federal
poverty level. Health care costs are based on actuarial estimates of a
comprehensive benefits package which meets the federal CHIP requirement.
Use of a third party administrator is assumed. Other administrative
costs are based on updated HHSC data and include program oversight at
HHSC and at TDH. The federal matching rate for CHIP is at an enhanced
rate (approximately 73 percent federal) for both client services and
administration, subject to a 10 percent cap on administration. The cap
is the reason for a less favorable matching ratio in the first year.
Total average monthly children served in the CHIP II program per year are
assumed to be as follows: 96,553 in 2000; 280,811 in 2001; 424,304 in
2002; 443,085 in 2003; and 447,958 in 2004.
Medicaid Spillover
Outreach for the new CHIP program is expected to increase participation
in the Medicaid program. This effect is termed "spillover." Spillover
is assumed to average 10.3 percent of Medicaid-eligible uninsured
children, using Current Population Survey data. Medicaid benefit costs
are estimates using the most recent TDH Medicaid reporting data.
Administrative costs include oversight and contract management at the
Department of Health and eligibility related costs at the Department of
Human Services. Client services in the Medicaid program are matched at
the Federal Medical Assistance Percentage (FMAP), or about 61 percent
federal, and administration is matched at 50 percent federal, 50 percent
state funds. Total average monthly number of children assumed to access
Medicaid are as follows: 9,415 in 2000; 34,374 in 2001; 58,362 in 2002;
63,230 in 2003; and 64,050 in 2004.
Total All Funds administrative costs to implement the provisions of the
bill are assumed to be as follows: $14,180,480 in 2000; $39,088,782 in
2001; $55,632,618 in 2002; $64,123,550 in 2003; and $65,672,366 in 2004.
Full-time equivalent positions to implement the CHIP II program are
assumed to be: 54 in 2000; 58 in 2001, and 57 per year thereafter (4 at
HHSC, 39 at TDH, and the balance each year at DHS). Full-time equivalent
positions at DHS for eligibility determination and other functions
associated with Medicaid spillover are assumed to be: 35 in 2000; 129 in
2001; 219 in 2002; 237 in 2003; and 240 in 2004. TDH would also
experience a slight increase in FTEs associated with Medicaid spillover,
ranging from 1 to 5.5 positions.
General revenue funds are assumed as matching funds in the table above.
House Bill 1/Senate Bill 2, the General Appropriations bills, As
Introduced, contain $151 million in general revenue from the Tobacco
Settlement for the purpose of implementing a new CHIP II program.
Local Government Impact
It is possible that local units of government, including hospital
districts, could realize savings through the implementation of this bill
to the extent that formerly uninsured children receive coverage through
the program.
Source Agencies:
LBB Staff: JK, TP, TB, KF