Austin, Texas
                    FISCAL NOTE, 77th Regular Session
                              March 6, 2001
          TO:  Honorable Mike Moncrief, Chair, Senate Committee on
               Health & Human Services
        FROM:  John Keel, Director, Legislative Budget Board
       IN RE:  SB376  by Zaffirini (Relating to consideration of assets
               and resources for purposes of determining eligibility of
               children for Medicaid.), As Introduced
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB376, As Introduced:  negative impact of $(97,168,414) 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                        $(40,603,307)  *
          *       2003                         (56,565,107)  *
          *       2004                         (56,590,411)  *
          *       2005                         (56,590,411)  *
          *       2006                         (56,590,411)  *
All Funds, Five-Year Impact:
*Fiscal        Probable             Probable        Change in Number of  *
* Year    Savings/(Cost) from  Savings/(Cost) from  DHS  Employees from  *
*            GR Match for        Federal Funds -          FY 2001        *
*              Medicaid              Federal                             *
*                0758                 0555                               *
*  2002          $(40,603,307)        $(18,702,238)                249.0 *
*  2003           (56,565,107)         (26,182,582)                335.7 *
*  2004           (56,590,411)         (26,157,278)                335.7 *
*  2005           (56,590,411)         (26,157,278)                335.7 *
*  2006           (56,590,411)         (26,157,278)                335.7 *
Fiscal Analysis
The bill would exclude the assets and resources of a person younger than
19 years of age, and those of the person's parents or other caretaker,
for purposes of determining Medicaid eligibility.  The bill would take
effect September 1, 2001.
The policy change would impact the Department of Health (TDH), the
Department of Human Services (DHS), the Employees Retirement System
(ERS), and the Health and Human Services Commission (HHSC), which
operates CHIP. It is assumed that funding would be realigned among state
agencies as needed, with implementation occurring January 2002.  No costs
related to automation are assumed. Medicaid services provided by TDH
would include premiums (weighted for fee for service and managed care),
prescriptions, dental, physician, hospital, laboratory and other
services.  Client costs would remain at the estimated FY 2001 level, with
no adjustment for inflation or change in service utilization.  (Average
costs do vary according to the mixture of client risk groups.)  The
federal share of total client services expenses would be 60.20% in FY
2002, 60.08% in FY 2003, and 60.07% in subsequent years.  Annual
savings/costs per eligibility-related FTE at DHS would total
approximately $30,850.  Of this amount, 19% is for employee benefits
funded at ERS.  The federal share of FTE expenses would be 50% of the

Thirty-two percent of CHIP enrollees are within Medicaid income limits.
It is assumed that 32% of CHIP clients funded in Senate Bill 1/House
Bill 1, As Introduced, would be shifted to Medicaid, increasing Medicaid
recipient months per month by 104,114 in FY 2002, and 138,819 in
subsequent years. A net cost increase would result from a fuller benefit
package and a less favorable federal match in Medicaid. Monthly client
services costs would total $136.55 in FY 2002 and $131.53 in subsequent
years for Medicaid, compared to $108.58 each year for CHIP. The federal
match for Medicaid is noted above, compared to 72.14% in FY 2002, and
72.05% in subsequent years for CHIP.  Additionally, it is assumed that
32% of potential CHIP enrollees above levels funded in Senate Bill
1/House Bill 1, As Introduced, would enroll in Medicaid, resulting in a
new cost to the state. Medicaid recipient months per month would
increase by 10,063 in FY 2002, and 21,500 in subsequent years. The
increase in Medicaid cases would be partially offset by a reduction in
application processing time, resulting in a net FTE increase totaling
249.0 in FY 2002 and 335.7 in subsequent years.
Local Government Impact
No significant fiscal implication to units of local government is
Source Agencies:   529   Health and Human Services Commission, 324
                   Texas Department of Human Services, 501   Texas
                   Department of Health
LBB Staff:         JK, HD, PP, SW