LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
April 29, 2001
TO: Honorable John T. Smithee, Chair, House Committee on
Insurance
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB3444 by Gallego (Relating to health care benefit
mandates and offer of coverage mandates.), Committee
Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3444, Committee Report 1st House, Substituted: negative impact *
* of $(983,228) 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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House Bill 3444 requires the Legislative Budget Board to prepare an
impact statement of a proposed mandate when the chair of a standing
committee of the legislature determines that a bill would, if enacted,
create a health care benefit mandate or an offer of coverage mandate and
requests the LBB to prepare an impact assessment.
After receipt of the request for an impact statement, the LBB has 21 days
to prepare a written impact statement. The LBB is required to obtain
the assistance of at least one certified actuary.
The bill includes a list of information that an impact statement prepared
by the LBB must address.
The impact assessment must be distributed to members of the committee
before the committee votes on the bill containing the proposed mandate
and the impact assessment must be attached to the bill on first printing
and must remain with the bill throughout the legislative process,
including submission to the governor.
The bill requires the Sunset Advisory Commission to review existing
health care benefit mandates. The Commission is required to obtain the
assistance of at least one certified actuary, and may contract for
medical and economic expertise.
The bill requires the Commissioner of Insurance to require certain
information to be submitted for the assessment of health care benefit
mandates and offer of coverage mandates as required in the bill. The
Commissioner is required to appoint an advisory committee of between 7-11
members to assist with the collection of data. The Employee Retirement
System must annually submit information requested to the Commissioner of
Insurance.
The bill would become effective September 1, 2001.
General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2002 $(250,684) *
* 2003 (732,544) *
* 2004 (491,472) *
* 2005 (986,472) *
* 2006 (491,472) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Change in Number of State *
* Year General Revenue Fund Employees from FY 2001 *
* 0001 *
* 2002 $(250,684) 3.5 *
* 2003 (732,544) 3.5 *
* 2004 (491,472) 7.5 *
* 2005 (986,472) 7.5 *
* 2006 (491,472) 7.5 *
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Technology Impact
The bill would have no technology impact on the Sunset Commission. The
technology impact on the Legislative Budget Board would be limited to
new computers for three FTEs.
Fiscal Analysis
The requirement that the LBB conduct impact assessments of proposed
mandated health benefits or offer of coverage mandates within 21 days
will result in costs to the Legislative Budget Board. These costs
include additional staff and associated costs, and costs to contract for
professional services.
The requirement for the Sunset Commission to assess benefit mandates will
result in costs to the Commission. These costs are related to the
equivalent of additional staff and their associated costs; funds to
contract for actuary, medical, and economic expertise to review a maximum
of five mandates; and production costs to conduct the study and issue
the report. Further, the Employees Retirement System indicates that they
will have costs associated with the provisions in the bill.
The bill would become effective September 1, 2001.
Methodology
This estimate assumes that the Legislative Budget Board will hire
internal staff before the 78th Legislative session, and would provide
impact assessments beginning with the 78th Legislative session (2003).
The estimate assumes that data will be available to conduct the
assessments, and that the Legislative Budget Board will be able to
contract for professional services for the analysis and would not have to
purchase any data. This estimate also assumes that impact assessments
will be requested only on bills that contain mandated health benefit
proposals or offer of coverage mandates, and that the Employee Retirement
System will be able to provide analyses of the impact of proposals on
ERS. The estimate for the cost of the impact assessments are calculated
as follows: it is assumed that there will be about 30 mandates
introduced in each legislative session; that of those 30, about 75
percent will require an impact assessment; that subsequent legislative
activity on the bills will require approximately 11 additional updated
impact statements; and that each impact assessment will cost $15,000.
This estimate assumes that the required mandate reviews by the Sunset
Commission will begin during the 2004-05 biennium, that 29 mandates would
be subject to the required review, and that a maximum of five mandates
would be reviewed each biennium. The cost to the Commission is based on
the agency's initial cost estimate for reviewing 7 mandates each
biennium, adjusted for a maximum of 5 mandate reviews per biennium, as
set forth in the committee substitute. Costs to the Commission to
contract for actuarial, medical, and economic expertise are based on
costs incurred by the Department of Insurance when it contracted for
similar expertise when conducting a study of mandated benefits. This
estimate assumes that additional staff will conduct the required reviews
during the 2004-05 and 2006-07 biennia. These costs would continue for
two additional biennia.
The Employees Retirement System indicates that they will have costs
associated with this bill. It is assumed, however, that the costs would
not be significant and that ERS could implement the provisions of the
bill within existing resources.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 116 Sunset Advisory Commission, 454 Texas
Department of Insurance, 327 Employees Retirement
System
LBB Staff: JK, JO, WP, AD