Amend CSSB 10 (house committee printing) by adding the
following SECTIONS to the bill, appropriately numbered, and
renumbering the SECTIONS of the bill accordingly:
SECTION ____. Subtitle G, Title 8, Insurance Code, is
amended by adding Chapter 1508 to read as follows:
CHAPTER 1508. HEALTHY TEXAS PROGRAM
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 1508.001. PURPOSE. (a) The purposes of the Healthy
Texas Program established under this chapter are to:
(1) provide for access to quality small employer
health benefit plans at an affordable price; and
(2) maximize reliance on strategies and procedures of
managed care proven by the private sector.
(b) The program is not intended to diminish availability of
traditional small employer health plan coverage to persons who are
eligible for that coverage.
Sec. 1508.002. DEFINITIONS. In this chapter:
(1) "Board" means the board of directors of the
(2) "Group health benefit plan issuer" means an
insurance company, association, organization, group hospital
service corporation, or health maintenance organization that
delivers or issues for delivery a group insurance policy or
insurance agreement, a group hospital service contract, or a group
evidence of coverage that provides health insurance or health care
benefits. The term includes:
(A) a life, health, and accident insurance
company operating under Chapter 841 or 982;
(B) a fraternal benefit society operating under
Chapter 885; and
(C) a stipulated premium company operating under
(3) "Program" means the Healthy Texas Program.
SUBCHAPTER B. CREATION OF PROGRAM; POWERS AND
DUTIES OF COMMISSIONER
Sec. 1508.051. CREATION ON COMMISSIONER DETERMINATION. (a)
If the commissioner by rule determines that, in all or any part of
this state, small employer group health benefit plan coverage is
not reasonably available to all market segments in the voluntary
market, the commissioner may establish the Healthy Texas Program to
deliver small employer group health benefit plans under this
chapter to market segments identified as underserved.
(b) The program shall be administered by a board of
directors and a management company in accordance with this chapter.
(c) The program is subject to the supervision and control of
Sec. 1508.052. GENERAL POWERS OF COMMISSIONER. (a) The
commissioner shall provide general supervision for the program.
(b) In exercising authority under this chapter, the
(1) examine the operation of the program, and shall
have free access to all the books, records, files, papers, and
documents relating to the operation of the program as necessary to
conduct an examination under this subdivision;
(2) summon, qualify, and examine as witnesses all
persons having knowledge of program operations, including the
members of the board, and officers and employees of the board;
(3) take any action necessary to enable this state and
the program to fully participate in any federal program which may be
enacted for purposes similar to the purposes of this chapter; and
(4) require the program to report to the department
concerning risks insured by the program under this chapter, as
considered necessary by the commissioner.
(c) The commissioner may review and approve policy forms,
endorsements, and riders used by the program.
(d) The commissioner may receive and review rates and any
rating methodology established for use by the program.
Sec. 1508.053. RULES. The commissioner may adopt rules as
necessary to implement this chapter in the manner prescribed by
Subchapter A, Chapter 36.
SUBCHAPTER C. BOARD OF DIRECTORS
Sec. 1508.101. BOARD OF DIRECTORS. (a) The commissioner of
insurance shall appoint the members of the board not later than the
31st day after the effective date of the commissioner rule under
Section 1508.051(a) establishing the program. The board is
composed of nine members appointed by the commissioner as follows:
(1) four members who are full-time employees of
authorized small employer health benefit plan issuers;
(2) three public members who reside in this state; and
(3) two members who are licensed life and health
(b) Members serve staggered six-year terms.
(c) The commissioner or the commissioner's designated
representative from the department shall serve as an ex officio
Sec. 1508.102. BOARD MEMBER IMMUNITY. (a) A member of the
board is not liable for an act performed, or omission made, in good
faith in the performance of powers and duties under this chapter.
(b) A cause of action does not arise against a member of the
board for an act or omission described by Subsection (a).
Sec. 1508.103. OPEN MEETINGS; PUBLIC INFORMATION. The
board is subject to:
(1) the open meetings law, Chapter 551, Government
(2) the public information law, Chapter 552,
SUBCHAPTER D. PROGRAM ADMINISTRATION
Sec. 1508.151. PROGRAM AUTHORITY. (a) The program may
exercise any of the authority that a health benefit plan issuer
authorized to write health benefit plans in this state may exercise
under the laws of this state.
(b) The program shall operate as a health benefit plan
issuer, and is subject to the maintenance tax imposed under Chapter
257 as if the program were an insurer.
Sec. 1508.152. PLAN OF OPERATION; COMMISSIONER APPROVAL.
(a) The board shall submit to the commissioner a plan of operation
and any amendments to that plan necessary or suitable to ensure the
fair, reasonable, and equitable administration of the program.
(b) The plan of operation must be approved by the
commissioner before inception of any program operations.
(c) The commissioner by rule may approve the plan of
operation and any subsequent amendments if the commissioner
determines the plan or the plan as amended is suitable to ensure the
fair, reasonable, and equitable administration of the program.
(d) The plan of operation is effective on the written
approval of the commissioner.
Sec. 1508.153. MANAGEMENT COMPANY. (a) To fully carry out
the purposes of the program, the board shall contract with a
management company that is qualified to administer, manage, and
operate the program. The management company must hold a
certificate of authority as an administrator under Chapter 4151.
(b) The management company must be approved by the
Sec. 1508.154. FILING OF RATES. The board shall file with
the commissioner the proposed rates and rate information to be used
by the program in connection with the issuance of policies, riders,
or endorsements. Rates must be set in amounts sufficient to carry
all claims to maturity and to meet all expenses incurred in the
writing and servicing of the business.
Sec. 1508.155. AUDIT. (a) The board shall by contract
secure the services of an independent auditor, who shall annually
(1) the operations and transactions of the program;
(2) the manner in which the management company is
performing the company's duties.
(b) The independent auditor shall deliver to the board a
report of the results of the audit conducted under this section.
Sec. 1508.156. ANNUAL REPORT. (a) The board shall compile
a calendar year annual operating report regarding the program, and
shall submit the report to the commissioner not later than March 31
of the following calendar year.
(b) The annual report must be accompanied by a copy of the
auditor's report under Section 1508.155(b).
Sec. 1508.157. PROGRAM COVERAGE; ELIGIBILITY. (a) A small
employer health benefit plan offered through the program must
provide coverage consistent with that offered under a small
employer health benefit plan subject to Subchapter F, Chapter
(b) An applicant for coverage from the program is eligible
for the coverage if the applicant has:
(1) not been covered by a health benefit plan during
the 12-month period preceding the date of the application; or
(2) has lost health benefit plan coverage due to a
(c) The commissioner by rule shall establish employer
contribution and employee participation requirements applicable to
coverage under the program, as well as other participation criteria
applicable to small employer participation.
Sec. 1508.158. CONTRACTS. The board may, subject to
commissioner approval, enter into contracts as necessary or proper
to implement this chapter.
SUBCHAPTER E. PROGRAM DISSOLUTION
Sec. 1508.201. DEFINITION. In this subchapter, "plan"
means the plan of dissolution and termination of the program
required by this subchapter.
Sec. 1508.202. PLAN OF DISSOLUTION. (a) The board, at the
direction of the commissioner and not later than the seventh
anniversary of the date on which the program is established, shall
develop and submit to the commissioner a plan for dissolution of the
program and termination of program operations in accordance with
(b) The plan must:
(1) ensure the fair, reasonable, and equitable winding
down and dissolution of the program and termination of program
(2) provide for the sharing of any remaining program
assets on a proportionate basis in accordance with this subchapter.
Sec. 1508.203. APPROVAL OF PLAN BY COMMISSIONER;
COMMISSIONER ACTION IF PLAN NOT APPROVED. (a) The commissioner may
approve the plan if the commissioner determines the plan meets the
requirements of Sections 1508.202 and 1508.204. The plan is
effective on the written approval of the commissioner.
(b) If the board fails to submit a plan the commissioner can
approve, the commissioner, after notice and hearing, shall adopt a
plan by rule.
Sec. 1508.204. PLAN REQUIREMENTS. (a) The plan must:
(1) specify the date after which a person covered by a
small employer health benefit plan issued by the program and
effective on the date of the plan of dissolution may not submit
(2) provide for:
(A) the filing, receipt, processing, and payment
of all claims against the program, and all debts of the program, and
the extinguishment of all liabilities of the program, including
balances on any lines of credit that may have been established by or
on behalf of the program, and including any credit for or refund of
(B) the collection and receipt of all outstanding
amounts owed to the program;
(C) a final audit of the program by the state
auditor, as provided by Section 1508.205; and
(D) the distribution of any surplus assets of the
program that remain after the closing date, in a manner that shares
the remaining program assets on a proportionate basis and in
accordance with this section; and
(3) specify, as the closing date, the effective date
of the closing of the transactions required by the plan and
addressed in this section.
(b) The closing date may not be earlier than the third
anniversary, or later than the seventh anniversary, of the
effective date of the plan.
Sec. 1508.205. AUDIT. The transactions necessary to
complete execution of the plan are subject to audit by the state
auditor under Chapter 321, Government Code. The state auditor
shall report the cost of the final audit conducted under this
section to the board and the comptroller, and the board shall remit
that amount to the comptroller for deposit to the general revenue
Sec. 1508.206. OPERATION OF PROGRAM AFTER CLOSING DATE.
(a) The program shall continue the program's existence until the
third anniversary of the closing date established by the plan,
solely for the purpose of prosecuting or defending in the program's
name any action or proceeding by or against the program.
(b) During the three-year period established by Subsection
(a), the board members serving at the time of dissolution shall
continue to manage the affairs of the program for the sole purpose
stated by that subsection, and have the powers and immunities
necessary to accomplish that sole purpose, in accordance with
(c) If, during the three-year period established by
Subsection (a), a board member fails to serve, the commissioner
shall appoint a replacement member in accordance with Section
SUBCHAPTER F. REVENUE BOND PROGRAM AND PROCEDURES
Sec. 1508.251. LEGISLATIVE FINDING. The legislature finds
that the issuance of bonds for the purpose of providing a method to
raise funds to provide small employer health benefit plans through
the Healthy Texas Program for employers in this state is for the
benefit of the public and in furtherance of a public purpose.
Sec. 1508.252. DEFINITION. In this subchapter, "bond
resolution" means the resolution or order authorizing bonds to be
issued under this subchapter.
Sec. 1508.253. APPLICABILITY OF OTHER LAWS. (a) The
following laws apply to bonds issued under this subchapter to the
extent consistent with this subchapter:
(1) Chapters 1201 through 1202, Government Code;
(2) Chapters 1205 through 1207, Government Code;
(3) Chapters 1231 through 1232, Government Code; and
(4) Chapter 1371, Government Code.
(b) In the event of a conflict between this subchapter and a
law listed in Subsection (a), this subchapter controls.
Sec. 1508.254. ISSUANCE OF BONDS AUTHORIZED. On behalf of
the program, the Texas Public Finance Authority shall issue revenue
(1) establish the initial surplus of the program;
(2) establish and maintain reserves;
(3) pay initial operating costs;
(4) pay costs related to issuance of the bonds; and
(5) pay other costs related to the bonds as may be
determined by the board.
Sec. 1508.255. BOND LIMITS. The Texas Public Finance
Authority may issue, on behalf of the program, bonds in a total
amount not to exceed $200 million.
Sec. 1508.256. TERMS OF ISSUANCE; BOND CONDITIONS. (a)
Bonds may be issued at public or private sale.
(b) Bonds may mature not later than the 20th anniversary of
the date of issuance.
(c) Bonds must be issued in the name of the program.
Sec. 1508.257. ADDITIONAL COVENANTS. In a bond resolution,
the board may make additional covenants with respect to the bonds
and the designated income and receipts of the program pledged to
payment of the bonds, and may provide for the flow of funds and the
establishment, maintenance, and investment of funds and accounts
with respect to the bonds.
Sec. 1508.258. SPECIAL ACCOUNTS. (a) A bond resolution may
establish special accounts, including an interest and sinking fund
account, reserve account, and other accounts.
(b) The chief financial officer of the program or the
officer's designee shall administer the accounts in accordance with
Sec. 1508.259. SOURCE OF PAYMENT; STATE DEBT NOT CREATED.
(a) Bonds are payable only from:
(1) the maintenance tax surcharge established under
Section 1508.260; or
(2) any other amounts the program is authorized to
levy, charge, or collect in connection with paying any portion of
(b) Bonds are obligations solely of the program. Bonds do
not create a pledging, giving, or lending of the faith, credit, or
taxing authority of this state.
(c) Each bond must include a statement that the state is not
obligated to pay any amount on the bond and that the faith, credit,
and taxing authority of this state are not pledged, given, or lent
to those payments.
(d) Each bond issued under this subchapter must state on its
face that the bond is payable solely from the revenues pledged for
that purpose and that the bond does not and may not constitute a
legal or moral obligation of the state.
Sec. 1508.260. MAINTENANCE TAX SURCHARGE. (a) A
maintenance tax surcharge is assessed against:
(1) the program; and
(2) subject to Subsection (d), each group health
benefit plan issuer in this state that issues a group health benefit
plan to an employer to provide health insurance or health care
(b) The maintenance tax surcharge under Subsection (a)(1)
shall be set in an amount sufficient to pay all debt service on the
bonds. The maintenance tax surcharge shall be set by the
commissioner at the same time and shall be collected by the
comptroller on behalf of the program in the same manner as provided
under Chapter 257 for the collection of the maintenance tax
assessed under that chapter.
(c) To establish the surcharge under Subsection (b), the
commissioner shall increase the maintenance tax rate to which the
program is subject to a rate sufficient to pay all debt service on
the bonds, subject to the maximum tax rate established by Chapter
257. If the resulting tax rate is insufficient to pay all costs for
the program under this subchapter and all debt service on the bonds,
the commissioner may assess an additional surcharge to the program,
not to exceed one percent of the program's gross small employer
group health benefit plan premiums, as necessary to cover all debt
service on the bonds. In this subsection, the maintenance tax
surcharge includes the additional maintenance tax assessed under
this subsection and the additional surcharge assessed under this
subsection to pay all debt service of the bonds.
(d) If the assessment procedure established under
Subsection (c) is insufficient to cover all debt service on the
bonds, and subject to the operating procedure provisions in the
program plan of operation, the commissioner may assess group health
benefit plan issuers described by Subsection (a)(2) a surcharge,
not to exceed one percent of the gross group health benefit plan
premiums, exclusive of small employer group health benefit plan
premiums, to cover all debt service on the bonds. For purposes of
this subsection, the maintenance tax surcharge includes the
surcharge assessed under this subsection to pay all debt service of
(e) The program and a group health benefit plan issuer,
respectively, may pass through the maintenance tax surcharge
established under Subsections (c) and (d) to the policyholders of
the program and those issuers.
Sec. 1508.261. EXEMPTION FROM TAXATION. The bonds issued
under this subchapter, any interest from the bonds, and all assets
pledged to secure the payment of the bonds are free from taxation by
this state or a political subdivision of this state.
Sec. 1508.262. AUTHORIZED INVESTMENTS. Bonds issued under
this subchapter constitute authorized investments under Subchapter
D, Chapter 425.
Sec. 1508.263. STATE NOT TO IMPAIR BOND OBLIGATIONS;
PLEDGE. (a) The state pledges to and agrees with the owners of any
bonds issued in accordance with this subchapter that the state will
not limit or alter the rights vested in the program to fulfill the
terms of any agreements made with the owners of the bonds or in any
way impair the rights and remedies of those owners until the bonds,
any premium or interest, and all costs and expenses in connection
with any action or proceeding by or on behalf of those owners are
fully met and discharged.
(b) The program may include the pledge and agreement of the
state in any agreement with the owners of the bonds.
Sec. 1508.264. ENFORCEMENT BY MANDAMUS. A writ of mandamus
and all other legal and equitable remedies are available to any
party at interest to require the program and any other party to
carry out agreements and to perform functions and duties under this
subchapter, the Texas Constitution, or a bond resolution.
SECTION ____. (a) Not later than November 1, 2008, the
commissioner of insurance shall provide an interim progress report
to the lieutenant governor, the speaker of the house of
representatives, and the members of the 81st Legislature regarding
the operation of the Healthy Texas Program established under
Chapter 1508, Insurance Code, as added by this Act. The report must
include information regarding:
(1) the potential economic impact that the program
would have on the small employer insurance market in this state;
(2) the anticipated impact that the program would have
on the quality of health care provided in this state;
(3) the progress of any proposed or adopted rules
addressing the program;
(4) the progress of a draft or approved plan of
operation for the program; and
(5) the efficacy and feasibility of expanding the
program to include application to governmental entities.
(b) A health benefit plan may not be issued by the Healthy
Texas Program established under Chapter 1508, Insurance Code, as
added by this Act, before January 1, 2010.