LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
Revision 2
April 23, 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.), As Introduced
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3444, As Introduced: 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 may use any information
the director determines is reliable, and may obtain assistance from a
state agency or contract with a private entity. The LBB is required to
obtain the assistance of at least one certified actuary.
The impact statement prepared by the LBB must include any reports
prepared by experts retained by the LBB and a description of the
underlying assumptions, data, and studies. The bill requires that the
impact assessment contain information on: the level of demand in the
state for the coverage that is the subject of the mandate, the extent to
which the coverage is available under health benefit plans already in
effect, the extent to which the proposed mandate would be available in
the absence of health benefit plan coverage, the epidemiological impact
and medical efficacy of the proposed mandate and the effect on an
individual's health of not providing the treatment, the direct impact of
the mandate on health benefit plan premiums, the net impact of the
mandate on premiums, the costs to an individual of obtaining the
treatment in the absence of health benefit plan coverage, the fiscal
impact on the state associated with enacting the mandate and with not
enacting the mandate, the impact on the economy and society of not
providing the treatment, the impact of the treatment on the use of sick
days and disability costs, the relative quality and cost-efficiency of
the care that is the subject of the mandate in the absence of health
benefit plan coverage, and a description of the extent to which the
proposed mandate or offer of coverage is required by federal law and the
consequences of not enacting a mandate meeting the minimum requirements
of federal law.
If the bill concerns an offer of coverage mandate, then the LBB impact
assessment must also estimate the difference in cost of a plan that
provides the coverage and one that does not provide the coverage. For a
health benefit mandate, the impact assessment must also estimate the
impact if it were an offer of coverage mandate. An impact assessment
must provide a separate analysis of the cost to the Employee Retirement
System of providing the proposed mandate even if the program would not be
subject to the mandate. An impact assessment must provide a separate
analysis of the costs of the proposed mandate or offer of coverage
mandate for group health benefit plans (collectively and according to
type of plan), individual health benefit plans, and small employer health
benefit plans even if those plans are not subject to the mandate.
If the director of the LBB determines that the impact cannot be fully
determined, or cannot develop sufficient information to prepare a
complete impact assessment within 21 days, the director shall report that
to the chair of the committee, and prepare an impact assessment that
complies as fully as possible with the requirements and explains which
requirements are not met and the reasons they are not met.
The impact assessment must be distributed to members of the committee
before the committee votes on the bill containing the proposed mandate.
If there is an amendment to the bill in committee, the chair must obtain
an updated impact statement. 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 must assess mandates based
on dates assigned by the Commissioner of Insurance. Using criteria
specified by the bill, the Commission must conduct an assessment, hold
hearings, issue a report, conduct public hearings, and recommend whether
to continue, modify, or repeal each mandate. The Commission is required
to obtain the assistance of at least one certified actuary, and may
contract for medical and economic expertise.
Assessment criteria include level of demand for the coverage mandate,
extent to which service would not otherwise be available, epidemiological
impact and medical efficacy of service, direct impact of the mandate on
plan premiums, cost to an individual to purchase the service absent the
mandate, the fiscal impact to the state associated with continuing the
mandate and repeal, impact on the economy and society of not providing
the service, impact of the service on use of sick days and disability
costs, relative quality and cost efficiency of the care if not mandated,
and the extent to which mandate is required by federal law and
consequences of repeal.
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 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 (593,043) *
* 2005 (1,088,043) *
* 2006 (355,499) *
****************************************************
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 (593,043) 7.5 *
* 2005 (1,088,043) 7.5 *
* 2006 (355,499) 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 four additional staff, their associated costs; funds to
contract for actuary, medical, and economic expertise; and production
costs to conduct the study and issue the report.
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 the Commissioner would
spread these evenly over four Sunset review cycles. This would result in
seven mandates up for review in the 2004-5 biennium and seven mandates
during the 2006-7 biennium. Commission staff, production, and associated
costs are estimated based on historical costs related to similar-sized
reviews. 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 four additional
staff will conduct the required reviews during the 2004-5 and 2006-7
biennia. These costs would continue for two additional biennia.
The Employees Retirement System believes that it might have increased
administrative costs associated with this bill.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 116 Sunset Advisory Commission, 454 Texas
Department of Insurance, 304 Comptroller of Public
Accounts
LBB Staff: JK, SD, JO, AD