LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
March 3, 1999
TO: Honorable Jane Nelson, Chair, Senate Committee on Health
Services
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB445 by Moncrief (Relating to a child health plan for
certain low-income children.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB445, As Introduced: negative impact of $(115,527,908) 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. *
* *
* This bill would create a child health plan for low-income children. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $(20,394,756) *
* 2001 (95,133,152) *
* 2002 (147,096,009) *
* 2003 (158,495,045) *
* 2004 (163,911,134) *
****************************************************
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 $(20,394,756) $(18,638,007) 90.0 *
* 2001 (95,133,152) (226,702,502) 190.1 *
* 2002 (147,096,009) (359,454,322) 281.1 *
* 2003 (158,495,045) (376,260,558) 299.5 *
* 2004 (163,911,134) (393,591,223) 302.5 *
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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.
The bill also provides an option for HHSC to contract with a third party
administrator for enrollment services.
Income eligibility may not be set higher than 200 percent of the federal
poverty level under the provisions of this bill.
Methodology
Estimates above assume that HHSC would implement the program at 200
percent of the federal poverty level for all eligible age groups. If the
program were implemented at a lower federal poverty level, the fiscal
impact would be reduced. 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
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 include program oversight at HHSC and at TDH. The federal matching
rate for CHIP is 73.72 percent federal, 26.28 percent state funds 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 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: $14,045,925 in 2000; $34,611,870 in
2001; $48,597,446 in 2002; $56,483,127 in 2003; and $57,638,925 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 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, AZ, KF