Austin, Texas
                    FISCAL NOTE, 77th Regular Session
                                Revision 1
                              April 11, 2001
          TO:  Honorable Patricia Gray, Chair, House Committee on Public
        FROM:  John Keel, Director, Legislative Budget Board
       IN RE:  HB2807  by Kitchen (Relating to a demonstration project
               to extend Medicaid coverage to certain low-income
               individuals.), Committee Report 1st House, Substituted
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB2807, Committee Report 1st House, Substituted:  an impact of $0     *
*  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.                                                             *
Based on additional information from the Department of Human Services it
is assumed the agency could absorb automation costs related to
implementation of the bill.
General Revenue-Related Funds, Five-Year Net Impact:
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2002                                   $0  *
          *       2003                                    0  *
          *       2004                                    0  *
          *       2005                                    0  *
          *       2006                                    0  *
All Funds, Five-Year Impact:
*Fiscal    Probable Savings/(Cost) from    Probable Savings/(Cost) from   *
* Year    All Local Units of Government      Federal Funds - Federal      *
*                                                      0555               *
*  2002                      $(4,282,492)                    $(6,653,538) *
*  2003                       (4,295,404)                     (6,464,626) *
*  2004                       (4,296,480)                     (6,463,550) *
*  2005                       (4,296,480)                     (6,463,550) *
*  2006                       (4,296,480)                     (6,463,550) *
Technology Impact
For the Department of Human Services (DHS), automation costs estimated to
be $352,000 for FY 2002.
Fiscal Analysis
The bill would require the Health and Human Services Commission (HHSC) to
establish and monitor a demonstration project to provide medical
assistance to adults with family income not more than 200% of the federal
poverty level who are not otherwise eligible for the assistance and do
not have adequate health coverage.

The Texas Department of Health (TDH) would administer the project, select
the counties (one of which must have a population of more than 725,000)
or municipalities (one of which must have a population of not more than
600,00) in which to implement and evaluate its effectiveness, including
cost-effectiveness.  If the project is cost-effective, TDH is to request
funding to continue or expand the project in the budget request for the
next fiscal biennium.  Each even-numbered year of the project, TDH would
provide a report to the Legislature on the project operation and

The bill would require the HHSC to ensure local government entities
provide matching funds. The HHSC would be required to apply for necessary

The bill would be effective immediately if it receives the necessary
two-thirds vote in both chambers of the Legislature.  Otherwise, the
effective date would be September 1, 2001.
1. It is assumed the demonstration project would be approved through the
Medicaid waiver process and federal funds would be available.

2. TDH assumes 2000 clients would participate in the project.

3. It is assumed the same mix of risk groups that presently constitute
the Medicaid program would constitute the pilot project. (Aged, 43.57
percent, Disabled/Blind, 25.6 percent, TANF Adults, 14.9 percent,
Pregnant Women, 12.66 percent, and Medically Needy, 3.27 percent.)

4. The following premium costs are assumed: Aged, $223.93,
Disabled/Blind, $825.08, TANF Adults, $252.56, Pregnant Women, $586.20,
and Medically Needy, $847.20.

5. It is assumed the project would be implemented September 1, 2001.
Local Government Impact
It is assumed local governments would provide the matching funds required
for services.  See table above.
Source Agencies:   529   Health and Human Services Commission, 324
                   Texas Department of Human Services, 501   Texas
                   Department of Health
LBB Staff:         JK, HD, KF, AJ