LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 21, 2001
TO: Honorable Patricia Gray, Chair, House Committee on Public
Health
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1967 by Najera (Relating to a state prescription drug
plan for certain older individuals and individuals who
have serious health care conditions.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1967, As Introduced: negative impact of $(471,594,723) 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. *
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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 *
* 2002 $(184,337,192) *
* 2003 (287,257,531) *
* 2004 (398,786,443) *
* 2005 (405,987,437) *
* 2006 (414,975,657) *
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All Funds, Five-Year Impact:
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*Fiscal Probable Probable Revenue Probable Revenue *
* Year Savings/(Cost) from Gain/(Loss) from Gain/(Loss) from *
* General Revenue Fund Vendor Drug Rebates General Revenue Fund *
* 0001 (State Share) 0001 *
* 0706 *
* 2002 $(320,630,398) $6,080,100 $130,213,106 *
* 2003 (505,211,248) 9,702,446 208,251,271 *
* 2004 (701,543,128) 13,477,281 289,279,404 *
* 2005 (714,372,736) 13,723,953 294,661,346 *
* 2006 (730,701,328) 14,037,900 301,687,771 *
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Technology Impact
For the Texas Department of Health (TDH), 10,000 hours of programming for
initial development at a cost of $1,100,000 and annual operating costs
of $250,000 thereafter. For the Department of Human Services (DHS),
30,000 hours of programming for initial development at a cost of
$3,300,000 and annual maintenance costs of $330,000 thereafter.
Programming is estimated to cost $110 per hour.
Fiscal Analysis
The bill would provide prescription drug benefits to state residents who
are at least 65 years of age and have serious health care conditions.
The bill would not create an entitlement. The Health and Human Services
Commission (HHSC) would be responsible for setting policy and overseeing
implementation. The bill would be effective immediately if it receives
two-thirds vote in both chambers. Implementation would be required by
September 1, 2002. The dollars in the table above assume implementation
by September 1, 2002.
Methodology
The HHSC estimates 203,350 clients in FY 2002, 324,500 in FY 2003,
450,750 in FY 2004, 459,000 in FY 2005, and 469,500 in FY 2006 would
participate in the proposed program. It is assumed the average cost per
prescription is $74.60 and the average number of prescriptions per month
per client is 1.67. DHS assumes eligibility and disability
determination will be handled by a third party contractor, based upon
the following: 1) Application processing fee ($21 per application), 2)
Annual enrollment fee ($11 per participant), 3) Monthly maintenance fee
($2.15 per participant), 4) Disability determination fee ($2.32 per
participant). It is assumed the TDH Vendor Drug Program would negotiate
and collect rebates from drug manufacturers for this program and that 2%
of the drug costs would be collected. Cost-sharing based upon the
participant's household income is assumed (Incomes at or below 200
percent of the federal poverty level (FPL) will share in 10 percent of
the drug cost and those above 200 percent of FPL will contribute 50
percent of the cost.) It is assumed cost sharing revenues would be
deposited into the General Revenue Fund.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 529 Health and Human Services Commission, 302
Office of the Attorney General, 324 Texas
Department of Human Services, 454 Texas Department
of Insurance, 501 Texas Department of Health
LBB Staff: JK, HD, AJ, KF