HBA-MPA H.B. 975 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 975
By: Denny
Pensions and Investments
3/9/1999
Introduced


BACKGROUND AND PURPOSE 

Currently, the Education Code requires school districts to offer insurance
coverage that is comparable to the basic coverage provided to state
employees.  The 75th Legislature enacted a bill that required the executive
director of the Teachers Retirement System of Texas (TRS) to certify
whether a district's coverage is comparable to the basic health coverage
provided under the Texas Employees Uniform Group Insurance Benefit Act
(Article 3.50-2,V.T.C.S.).  TRS carried out this mandate and issued its
findings in their report to the 76th Legislature. 

Among the many findings in the Certification Report and Comparability Study
issued by TRS in December 1998, the report found 44 percent of school
districts out of compliance with the law requiring them to offer one plan
of benefits comparable to state employees.  Only 34 percent of the plans
offered by districts are rated as comparable and only six percent of
comparable plans also pay 100 percent of the employee premium.  The average
employee premium for comparable plans is $183 per month, only 64 percent of
the average premium is paid by districts.  More than half of the education
workforce are in plans rated non-comparable, or they choose not to
participate in district health insurance at all, while 30 percent of
employees choose non-comparable plans where there is no monthly premium.
TRS estimates that school districts will spend $788 million in FY 1998-1999
on employee-only health insurance.  Currently, school districts on average
pay 85 percent of employee-only premiums, which leaves school employees
paying $119 million. 

H.B. 975 creates a statewide group health benefit coverage plan for
employees of school districts to be administered by TRS.  As introduced,
the bill requires all school districts to participate and contribute 65
percent of the cost for the employee only, the state will contribute ten
percent, and the employee will be responsible for 25 percent of the cost if
they choose to participate.  This bill eliminates the comparability issue
among school districts relating to group health benefits coverage. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Teachers Retirement System of Texas
in SECTION 6 (Section 7A, Article 3.50-4, Insurance Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1.  Amends Sections 2(2) and (5), Article 3.50-4, Insurance Code,
as follows: 

(2) Defines "carrier" to mean an insurance company authorized to do
business in this state, a group hospital service corporation (Chapter 20,
V.T.C.S.), or a health maintenance organization (Chapter 20A, V.T.C.S.).
Creates new paragraphs from new and existing text and makes nonsubstantive
changes. 

(5) Adds health maintenance organization to the list of service providers
in the definition of "health benefit plan" or "plan."   

SECTION 2.  Amends Section 3(a), Article 3.50-4, Insurance Code, to make
conforming and nonsubstantive changes. 

SECTION 3. Amends Section 5(a), Article 3.50-4, Insurance Code, to make
conforming and  nonsubstantive changes. 

SECTION 4. Amends Section 6, Article 3.50-4, Insurance Code, to prohibit
the appointment of  a person to the Health Benefit Advisory Committee,
rather than the Retirees Advisory Committee, if that person is required to
register under Chapter 305 (Registration of Lobbyists), Government Code,
rather than Article 6252 9c, V.T.C.S.  Exempts the advisory committee from
the requirements of Section 2110.008, Government Code, which establishes
that an advisory committee is automatically abolished on the fourth
anniversary of its creation, unless otherwise specified by its governing
body. 

SECTION 5.  Amends the title of Section 7, Article 3.50-4, Insurance Code,
as follows: 

New title: PARTICIPATION BY RETIREE.

SECTION 6.  Amends Section 7A, Article 3.50-4, Insurance Code, as follows:

Sec. 7A. (a) Requires each public school district to participate in the
Texas Public School Employees Group Insurance Program (program), and
provides that it must accept the schedule of costs adopted by the Teachers
Retirement System of Texas (trustee).  Deletes provision allowing the
district to offer an approved alternative health benefit plan. 

(b) Requires the trustee to establish minimum benefit standards for the
program, rather than eligibility requirements for participation by school
districts.  Deletes reference to restrictions on the school district's
participation in the program.  Requires the trustee to establish other
participation requirements for school districts as determined by the
trustee to be necessary for the operation of the program.  Makes conforming
and nonsubstantive changes. 

(c) Requires the trustee to provide basic group health benefits coverage
for each active employee, and authorizes optional group coverage for active
employees.  Requires the trustees to define, by rule, the requirements of
the basic coverage. 

(d) Requires each active employee of a school district to participate in
the basic coverage unless the employee specifically waives participation in
writing.  Makes conforming and nonsubstantive changes. 

(e) Requires each school district to contribute for each covered employee
an amount equal to 65 percent, rather than 75 percent, of the cost of the
employee's group coverage. Deletes the requirement that the trustee certify
the contribution of the district, and determine if it is sufficient to
underwrite the cost of coverage. 

(f) Requires each active employee covered by the program to pay, through a
deduction from the employee's compensation, an amount equal to 25 percent
of the cost of employee-only coverage authorized by the trustee, and that
portion of the cost of optional or dependant coverage that exceeds the
amount deducted to cover the above amount. 

(g) Requires the state to contribute an amount equal to ten percent of the
cost of employee-only coverage authorized by the trustee.  Redesignates
existing language of Subsection (h) to Subsection (g).  Deletes reference
to an expired fee, and to a requirement that the trustee begin enrollment
in the program with the 1996-1997 school year. 

SECTION 7.  Amends Section 9, Article 3.50-4, Insurance Code, to make
conforming and nonsubstantive changes. 

SECTION 8.  Amends Sections 10(a) and (b), Article 3.50-4, Insurance Code,
to require the trustee to make a written report to the commissioner of
insurance, rather than the State Board of Insurance and to make conforming
and nonsubstantive changes. 

SECTION 9.  Amends Section 13, Article 3.50-4, Insurance Code, to make a
conforming change. 
 
SECTION 10.  Amends Section 15(a), Article 3.50-4, Insurance Code, to add
school districts to a list of those paying into the school employees group
insurance fund. 

SECTION 11. Amends Sections 16 (a), (b), (c), (f), (g), (h), and (i),
Article 3.50-4, Insurance Code, to require the state's contribution to the
fund for coverage of retirees be an amount equal to .05 percent of the
employees salary, and  to make conforming and nonsubstantive changes. 

SECTION 12. Amends Section 17(a), Article 3.50-4, Insurance Code, to
require the trustee to study the health benefit plans available to active
employees and retirees. 

SECTION 13.  Amends Section 19, Article 3.50-4, Insurance Code, to require
the commissioner of insurance, rather than the State Board of Insurance, to
assist the trustee in carrying out this article, when requested. 

SECTION 14. Amends Article 3.51, Insurance Code , as follows:

Art. 3.51.  New title: GROUP INSURANCE FOR EMPLOYEES OF STATE AND ITS
SUBDIVISIONS AND COLLEGES.  Deletes "and school employees." 

Sec. 1. Deletes reference to common and independent school districts or an
agency or subdivision thereof as an entity authorized to contract for group
insurance coverage, and makes conforming and nonsubstantive changes. 

SECTION 15.  Amends Section 1, Chapter 123, Acts of the 60th Legislature,
Regular Session, 1967 (Article 3.51-3, Vernon's Texas Insurance Code), to
provide that a voluntary association organized on a non-profit membership
basis and composed of teachers or administrators in a public or private
educational institution may, in an elementary or secondary school, cover
its employees and their dependents under a group life, health, accident,
accidental death or dismemberment, and hospital, surgical or medical
expense insurance policy; or in colleges or universities cover any class or
classes of its membership under such a policy.  Creates subsections (a) -
(e) from existing text, and makes nonsubstantive changes. 

SECTION 16.  Amends Section 22.004, Education Code, to require that each
school district participate in the group health program provided under
Article 3.50-4, Insurance Code.  Requires the cost of coverage to be shared
by the employee, the district, and the state.  Requires each district to
report compliance with this section to the executive director of the
Teachers Retirement System of  Texas no later than November 1 of each year.
Provides that the report must include the schedule of benefits, the premium
rate sheet, the number of employees covered by the program in the district,
and other information considered appropriate by the executive director. 

Deletes substantial references to requirements for providing group health
insurance to its employees under Chapter 172 (Texas Political Subdivision
Uniform Group Benefit), Local Government Code, including the conditions
under which covered treatment can take place, and the authority of the
board of the Teachers Retirement System of Texas to adopt rules governing a
school district's health coverage.  Deletes reference to how a school
system's optional health coverage compares to the coverage provided under
the Texas Employees Uniform Group Insurance Benefit Act.  Deletes provision
allowing a school district to contract with an insurer to provide health
insurance.  Deletes reporting and auditing requirement for contract
insurers. Makes nonsubstantive and conforming changes. 

SECTION 17.  Repealer: Section 22.005, Education Code, (Health Care Plan
and Fund), and Sections 20 and 21, Article 3.50-4, Insurance Code, dealing
with the effective date of coverage and the non-applicability of Article
3.51, respectively. 

SECTION 18.  Requires the Teachers Retirement System of Texas to begin
enrollment in the group health benefits program for active employees to be
effective beginning with the 2000-2001 school year. 

SECTION 19.  Effective date: September 1, 1999.
 
SECTION 20.  Emergency clause.