LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 9, 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), Committee Report 2nd House,
Substituted
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* Estimated Two-Year Net Impact to General Revenue Related Fundsfor *
* SB445, Committee Report 2nd House, Substituted: negative impact *
* of $(127,027,427) 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:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(22,923,790) *
* 2001 (104,103,637) *
* 2002 (160,099,068) *
* 2003 (173,856,150) *
* 2004 (179,653,601) *
****************************************************
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 $(22,923,790) $(18,605,450) 93.0 *
* 2001 (104,103,637) (226,109,609) 193.1 *
* 2002 (160,099,068) (359,813,268) 284.1 *
* 2003 (173,856,150) (375,290,958) 302.5 *
* 2004 (179,653,601) (392,571,748) 305.5 *
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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). HHSC would also coordinate
the responsibilities of agencies necessary to implement the program
including the Texas Department of Health (TDH), the Texas Department of
Human Services (DHS), and the Texas Department of Insurance.
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.
At the implementation of the CHIP program, income eligibility would be
set at 200 percent of the federal poverty level for children between
birth and through 18 years of age. Income would be determined based on
net family income, similar to the Medicaid program.
The bill would also require that Medical Savings Accounts (MSAs) be
offered as an option to parents of CHIP-eligible children. No significant
fiscal impact is assumed from this provision.
Other provisions of the bill would affect certain qualified immigrant
children who are not currently eligible for CHIP or the Medicaid program
under federal law. HHSC would be required to implement a state-funded
health benefits program for these children with benefits comparable to
the CHIP program. Additionally, if federal law is amended to authorize
state options for Medicaid and CHIP coverage for these children, the
state would be required to adopt those coverage options.
Additional provisions of the bill require HHSC to appoint a CHIP advisory
committee and would specify that the CHIP program will be the first
program funded each fiscal year from state tobacco settlement proceeds.
Reimbursement of travel and related expenses for members of the advisory
committee would have to be authorized by the General Appropriations Act.
Methodology
Estimates above assume that HHSC would implement the program with
administrative assistance from TDH and contract with a third party
administrator for enrollment services. 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
administrative 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 CHIP 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.
State-funded Program for Qualified Immigrants
The general revenue costs to implement this provision are included in the
tables above. Costs for the 2000-01 biennium are estimated to be
$7,034,212. Annual costs are: $2,402,087 in 2000, $4,632,125 in 2001,
$7,480,241 in 2002, $7,947,266 in 2003; and $7,947,266 in 2004. If
federal matching funding became available for this program, state costs
would be reduced. Three FTEs are assumed in each year for program
administration. Average monthly children assumed to participate are:
1,085 in 2000; 3,917 in 2001; 6,586 in 2002; 7,044 in 2003; 7,044 in
2004.
General revenue funds are assumed as matching funds for the CHIP program
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, BB, KF