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.