LEGISLATIVE BUDGET BOARD
Austin, Texas
 
FISCAL NOTE, 80TH LEGISLATIVE REGULAR SESSION
 
May 17, 2007

TO:
Honorable Robert Duncan, Chair, Senate Committee on State Affairs
 
FROM:
John S. O'Brien, Director, Legislative Budget Board
 
IN RE:
HB1919 by Smith, Todd (Relating to health benefit plan coverage for treatment for certain brain injuries and serious mental illnesses.), As Engrossed



Estimated Two-year Net Impact to General Revenue Related Funds for HB1919, As Engrossed: a negative impact of ($1,540,372) through the biennium ending August 31, 2009.

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
2008 $0
2009 ($1,540,372)
2010 ($1,718,107)
2011 ($1,836,598)
2012 ($1,955,088)




Fiscal Year Probable (Cost) from
GENERAL REVENUE FUND
1 		Probable (Cost) from
GR DEDICATED ACCOUNTS
994 		Probable (Cost) from
OTHER SPECIAL STATE FUNDS
998 		Probable (Cost) from
STATE HIGHWAY FUND
6
2008 $0 $0 $0 $0
2009 ($1,540,372) ($80,331) ($8,067) ($358,024)
2010 ($1,718,107) ($89,600) ($8,998) ($399,335)
2011 ($1,836,598) ($95,780) ($9,618) ($426,875)
2012 ($1,955,088) ($101,959) ($10,239) ($454,416)

Fiscal Year Probable (Cost) from
FEDERAL FUNDS
555
2008 $0
2009 ($340,465)
2010 ($379,750)
2011 ($405,939)
2012 ($432,129)

Fiscal Analysis

The bill would amend the Insurance Code to require health benefit plans to provide coverage for testing, treatment, rehabilitation, and reintegration services in response to an acquired brain injury.

 

The bill would amend the Insurance Code to require coverage of anorexia nervosa and bulimia under certain group health benefit plans. The bill would require the Sunset Advisory Commission, with the cooperation of the Texas Department of Insurance (TDI), to conduct a study.

 

The bill would take effect September 1, 2007, and would require that changes made by the bill would only apply to a group health benefit plan that is delivered, issued for delivery, or renewed on or after January 1, 2008.


Methodology

Based on the analysis of the Employees Retirement System and Teacher Retirement System, it is assumed any costs associated with the bill's provision relating to coverage for services in response to an acquired brain injury would be insignificant because their health benefit plans currently provide coverage in compliance with the requirements of the bill.

 

It is assumed the bill would require health plans administered by Employees Retirement System (ERS) to include coverage for anorexia and bulimia. It is assumed ERS would incur costs for this coverage in the amounts reflected in the table above.

 

Based on the analysis of ERS, it is assumed the prevalence of these illnesses for females is 0.3 percent for anorexia and 1.0 percent for bulimia and the prevalence for males is 10 percent of that for females. It is assumed the treatment rate for these illnesses is 33.3 percent for anorexia and 6 percent for bulimia. It is also assumed allowable charges of $50,000 for treatment and that the amount paid for each patient would be 95 percent of allowable charges. In addition, this analysis does not include costs related to coverage for treatment facilities because the bill does not appear to address this issue.

 

Based on the analysis of the Sunset Advisory Commission and TDI, it is assumed duties and responsibilities associated with conducting a study regarding coverage for anorexia and bulimia under the bill could be absorbed with existing resources.

 

Based on the analysis the Texas Department of Insurance (TDI), it is assumed that there would be a one-time revenue gain of $31,300 in the General Revenue Dedicated Account Fund 36 in fiscal year 2008 because the bill would result in 313 filings, each accompanied by a $100 filing fee. Since General Revenue Dedicated Account Fund 36 is a self-leveling account, this analysis assumes all revenue generated would go toward fund balances or the maintenance tax would be set to recover a lower level of revenue the following year. It is also assumed that any costs realized by TDI from implementing the provisions of the bill could be absorbed within existing resources.


Local Government Impact

Counties, municipalities, and other local government entities to which the provisions of the bill requiring coverage for anorexia and bulimia would apply under the Local Government Code that either provide health insurance benefits for their employees and employees' dependents or participate in a group risk pool to provide insurance benefits could experience an increase in costs of negotiated health insurance contracts to include the additional coverage required by the bill. Whether those amounts would be absorbed by the local entity or passed on to the insured employees or in what amounts would vary depending on decisions made by local government officials and number of employees covered.

 

Montgomery County and the cities of Austin, Houston, and Sherman reported that implementing the provisions of the bill relating to coverage for services in response to an acquired brain injury would have a significantly negative impact on their budgets. Insurance rates would have to rise to cover the potential losses for the added coverage; however, the increases would be difficult to estimate because of the lack of specialized medical information available to these local entities and the inability to predict the number of employees affected by the specified acquired brain injuries. Dallas and Harris counties reported that provision of the bill would have no significant impact on their budgets.



Source Agencies:
323 Teacher Retirement System, 327 Employees Retirement System, 454 Department of Insurance, 116 Sunset Advisory Commission
LBB Staff:
JOB, KJG, JRO, MW, SK