| TO: | Honorable John T. Smithee, Chair, House Committee on Insurance |
| FROM: | John Keel, Director, Legislative Budget Board |
| IN RE: | HB1337 by Taylor (Relating to benefits required to be provided or offered under certain health benefit plans.), As Introduced |
House Bill 1337 would require the Legislative Budget Board (LBB) to prepare an impact statement for 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. The bill also includes a list of information the LBB would have to address in an impact statement.
After receipt of the request for an impact statement, the LBB would have 21 days to prepare a written impact statement and would be required to obtain the assistance of at least one certified actuary.
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 with the assistance of at least one certified actuary and allows the Commission the ability to 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 bill would take effect September 1, 2003.
| Fiscal Year | Probable Net Positive/(Negative) Impact to General Revenue Related Funds |
|---|---|
| 2004 | ($598,790) |
| 2005 | ($1,080,650) |
| 2006 | ($585,650) |
| 2007 | ($1,080,650) |
| 2008 | ($585,650) |
| Fiscal Year | Probable Savings/(Cost) fromGENERAL REVENUE FUND 1 |
Change in Number of State Employees from FY 2003 |
|---|---|---|
| 2004 | ($598,790) | 7.5 |
| 2005 | ($1,080,650) | 7.5 |
| 2006 | ($585,650) | 7.5 |
| 2007 | ($1,080,650) | 7.5 |
| 2008 | ($585,650) | 7.5 |
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 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.
The requirement that the Texas Department of Insurance assist with the reports would result in costs to the agency.
This estimate assumes the Legislative Budget Board will hire internal staff before the 79th Legislative session and would provide impact assessments beginning with the 79th Legislative session (2005). The estimate assumes data will be available to conduct the assessments, and 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 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 is calculated as follows: it is assumed that there will be about 22 mandates introduced in each legislative session that 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. The estimate also assumes that 3.5 additional FTEs would be needed.
The estimate for the Sunset Advisory Commission assumes the required mandate reviews will begin during the 2004-05 biennium, based on the timing of the adoption of Department of Insurance rules, the availability of data, and when the Commissioner of Insurance could reasonably assign review dates to each mandate currently required by law. Further, this estimate assumes that 29 mandates would be subject to the required review, and that the Commissioner would spread these evenly over three Sunset review cycles. This would result in ten mandates up for review in the 2004-5 biennium, ten mandates during the 2006-7 biennium, and nine mandates during the 2008-9 biennium. Staff, production, and associated costs are estimated based on historical costs related to similar-sized reviews. Costs 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 next three biennia.
The Texas Department of Insurance indicates that any costs associated with the bill could be absorbed within current resources.
| Source Agencies: | 116 Sunset Advisory Commission, 454 Department of Insurance, 501 Department of Health
|
| LBB Staff: | JK, JO, JRO, RT, RB
|