LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 79TH LEGISLATIVE REGULAR SESSION
 
March 31, 2005

TO:
Honorable Craig Eiland, Chair, House Committee on Pensions & Investments
 
FROM:
John S. O'Brien, Deputy Director, Legislative Budget Board
 
IN RE:
HB1795 by Crownover (Relating to the creation of health savings accounts for certain state employees and their dependents.), As Introduced



Estimated Two-year Net Impact to General Revenue Related Funds for HB1795, As Introduced: a negative impact of ($5,242,222) through the biennium ending August 31, 2007.

The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.



Fiscal Year Probable Net Positive/(Negative) Impact to General Revenue Related Funds
2006 $0
2007 ($5,242,222)
2008 ($7,920,313)
2009 ($9,686,714)
2010 ($9,686,714)




Fiscal Year Probable (Cost) from
GENERAL REVENUE FUND
1 		Probable (Cost) from
GR DEDICATED ACCOUNTS
994 		Probable (Cost) from
FEDERAL FUNDS
555 		Probable (Cost) from
OTHER SPECIAL STATE FUNDS
998
2006 $0 $0 $0 $0
2007 ($5,242,222) ($504,175) ($1,764,989) ($63,820)
2008 ($7,920,313) ($761,742) ($2,666,668) ($96,424)
2009 ($9,686,714) ($931,627) ($3,261,392) ($117,929)
2010 ($9,686,714) ($931,627) ($3,261,392) ($117,929)

Fiscal Year Probable (Cost) from
STATE HIGHWAY FUND
6
2006 $0
2007 ($1,624,794)
2008 ($2,454,852)
2009 ($3,002,337)
2010 ($3,002,337)

Fiscal Analysis

The bill makes the choice of High Deductible Health Plan (HDHP) along with a Health Savings Accounts (HSA) voluntary. This is expected to create adverse selection, by attracting a relatively small portion of Employees Retirement System (ERS) membership which was healthier than average and therefore less costly to the state. For many, the contribution to the HSA on their behalf would be greater than the amount of claims they would have incurred had they remained in the current plan. The combination of the cost of providing coverage under the HDHP together with the HSA contribution for this population would be greater than the cost of providing coverage under the current plan.

ERS would have increased administrative costs since in addition to contracts for the current plan vendors, contracts would need to be established for the HSA and HDHP vendors. Any additional administrative costs are not reflected in this fiscal note.


Methodology

ERS estimated the number of participants who would choose the HSA/HDHP option envisioned by the bill at intially 4%, increasing to 10% of members. The additional cost per member times the number of members gives the annual All Funds fiscal impact. The Method of Finance used for employee health insurance was used to allocate the All Funds fiscal impact among the various funds.

Local Government Impact

No fiscal implication to units of local government is anticipated.


Source Agencies:
304 Comptroller of Public Accounts, 327 Employees Retirement System
LBB Staff:
JOB, SR, WP, WM