LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 77th Regular Session April 20, 2001 TO: Honorable Dale B. Tillery, Chair, House Committee on Pensions & Investments FROM: John Keel, Director, Legislative Budget Board IN RE: HB1853 by Maxey (relating to coverage for certain dependent children under the Texas Employees Uniform Group Insurance Benefits Act.), Committee Report 1st House, Substituted ************************************************************************** * Estimated Two-year Net Impact to General Revenue Related Funds for * * HB1853, Committee Report 1st House, Substituted: negative impact * * of $(8,884,230) through the biennium ending August 31, 2003. * * * * The bill would make no appropriation but could provide the legal * * basis for an appropriation of funds to implement the provisions of * * the bill. * ************************************************************************** General Revenue-Related Funds, Five-Year Impact: **************************************************** * Fiscal Year Probable Net Positive/(Negative) * * Impact to General Revenue Related * * Funds * * 2002 $(4,171,000) * * 2003 (4,713,230) * * 2004 (5,325,950) * * 2005 (6,018,320) * * 2006 (6,800,700) * **************************************************** All Funds, Five-Year Impact: *************************************************************************** *Fiscal Probable Savings/(Cost) from Probable Savings/(Cost) from * * Year Tobacco Settlement Receipts Other Funds * * 5040 0997 * * 2002 $(4,171,000) $(679,000) * * 2003 (4,713,230) (767,270) * * 2004 (5,325,950) (867,020) * * 2005 (6,018,320) (979,730) * * 2006 (6,800,700) (1,107,100) * *************************************************************************** Fiscal Analysis The bill as substituted would increase employer contributions to fund the cost of basic coverage for children eligible to participate in the State Kids Insurance Program (SKIP). Currently, the state pays for 80% of the cost of dependent child coverage in the Uniform Group Insurance Program administered by the Employees Retirement System (ERS). The bill would increase that contribution to 100%. The bill would also require that the premiums, co-payments and other cost-sharing provisions for SKIP participants not exceed the amount of similar payments required under the Children's Health Insurance Program. Methodology The current provisions of SKIP increase the state's dependent child contribution from 50% to 80% of the cost. The estimated cost of the 30% additional contribution for fiscal year 2001 is $3,145,500. Increasing the state's contribution rate to 100% would cost an additional $2,369,600 in fiscal year 2002 and increase to $3,863,570 in fiscal year 2006. Projections assume a growth rate of 13% annually, based on ERS projections of health care cost increases. Currently 86% of SKIP expenditures are funded with moneys from the tobacco settlement, while the other 14% comes from non-General Revenue-related funding sources. There will also be additional costs incurred by reducing the co-payments and other cost-sharing provisions for the current ERS plans to match the CHIP provisions. ERS estimates that the state's cost for their plans would increase by 15% if the provisions were changed to match CHIP. The cost associated with the 15% increase is projected to be $2,480,400 in fiscal year 2002, increasing to $4,044,230 by fiscal year 2006. Currently 86% of SKIP expenditures are funded with moneys from the tobacco settlement, while the other 14% comes from non-General Revenue-related funding sources. Local Government Impact No fiscal implication to units of local government is anticipated. Source Agencies: 327 Employees Retirement System LBB Staff: JK, RB, SC