HBA-MPM H.B. 12 77(R) BILL ANALYSIS Office of House Bill AnalysisH.B. 12 By: Ehrhardt Teacher Health Insurance, Select 2/5/2001 Introduced BACKGROUND AND PURPOSE Current law requires school districts in Texas to offer employees a health insurance plan that is comparable to that offered to state employees under the Employee Retirement System of Texas (ERS). A study completed by the Teacher Retirement System of Texas (TRS) in August 2000 indicates that approximately 50 percent of public school employees are not covered by a plan that is comparable to that provided to state employees through ERS. The study also indicates that a large majority of teachers pay for their own insurance premiums, and that few school districts in Texas pay any portion of dependant coverage. House Bill 12 creates a uniform group health insurance plan, funded in full by the state, for all active and retired public school employees in Texas, as well as elective coverage for dependents. The plan, to be administered by TRS, would mirror coverage provided to state employees by ERS. Additionally, estimates provided by TRS indicate that the health insurance program for retired public school employees (TRS-Care) requires either the state or public school retirees to pay an estimated $6.9 billion over the next eight to 10 years for the program to remain solvent. H.B. 12 creates a larger risk pool that spreads the risk of older retirees over a pool of lower-risk active employees as a means to address TRSCare funding concerns. Additionally, state funding of health insurance for school district employees will allow districts to use funds currently spent on health insurance for other purposes. RULEMAKING AUTHORITY It is the opinion of the Office of House Bill Analysis that rulemaking authority is expressly delegated to the Teacher Retirement System of Texas in SECTION 1 (Article. 3.50-7, Insurance Code) and SECTIONS 3, 5, and 7 of this bill. ANALYSIS House Bill 12 amends the Insurance Code to establish the Texas School Employees Uniform Group Health Insurance Benefits Act. The bill requires the Teacher Retirement System of Texas (TRS) to implement and administer a statewide uniform group insurance program (program) to provide basic coverage for each fulltime employee or retiree of a school district. Administration of Program The bill authorizes TRS to contract with group insurance specialists or another administering firm on a competitive bid basis to administer the program. The selected administrator is required to assist TRS in ensuring that the program and coverage, services, and benefits are administered appropriately. The bill requires the selected administrator be paid by TRS and authorizes TRS to contract with any state agency, including the Employees Retirement System of Texas (ERS), for assistance with implementation. The bill provides that TRS has the same powers with regard to the program that ERS has in administering the Texas Employees Uniform Group Insurance Benefits Act, including the powers to adjudicate claims, expel participants, and adopt rules (Sec. 3, Art. 3.50-7). Participation in Program The bill requires each school district to participate in the program. Each full-time employee or retiree of a school district is covered by the program, unless the employee or retiree waives coverage or is expelled from the program. Part-time employees are eligible to participate in the program in the manner provided by TRS, unless the employee is expelled. School districts are required to notify all part-time employees of their eligibility for participation in the program (Sec. 4, Art. 3.50-7). Group Coverages TRS is required to establish group coverage plans for employees and retirees of school districts and their dependents that are comparable in scope and, to the greatest extent possible, in cost to those provided by ERS to state employees. The bill provides that the plans may include group life coverages, health benefit plans, accidental death and dismemberment coverages, coverages against short-term or long-term salary loss, and other coverages TRS considers advisable. The bill provides that comparable plans of each type be made available to all eligible participants. TRS, by rule, is authorized to define the basic coverage a participant receives, as well as optional coverage, which may include coverage for dependents and voluntary coverage. Basic coverage must include a health benefit plan. The bill authorizes TRS to provide a cafeteria plan for school district employees. TRS is authorized to determine if coverage is provided directly from state appropriations rather than through the purchase of coverage. The bill exempts selffunded plans of coverage from any other provision of the Insurance Code, unless state law specifically applies to a self-funded plan or to this article (Sec. 5, Art. 3.50-7). Payment of Contributions The bill requires the state to contribute for each program participant an amount equal to the amount provided for state employees. Participants are required to pay the portion of the coverage cost selected by the participant that exceeds the amount of state contribution (Sec. 6, Art. 3.50-7). Fund The bill requires that contributions made by the state and any amounts appropriated by the legislature for contingency reserves or administrative expenses be deposited in the Texas School Employees Uniform Group Insurance Trust Fund with the comptroller. TRS is authorized to use this money only to provide group coverages to eligible participants and to pay certain administrative costs. TRS is authorized to invest the assets of the fund in a manner specified by the Texas Constitution (Sec. 7, Art. 3-50-7). Termination of Program; Transfer of Property The bill requires TRS to transfer all coverages provided and all relevant records from the Texas Public School Employees Group Insurance Program to the program established by this bill no later than the date the program is implemented. The bill also requires the comptroller to transfer all assets and liabilities from the Texas Public School Employees Group Insurance Program to the program established by this bill no later than the date the program is implemented. Upon transfer of property, the Texas Public School Employees Group Insurance Program is terminated (Sec. 3A, Art. 3.50-4). Other Provisions The bill prohibits a school district or any other agency or subdivision of the public school system from procuring insurance contracts, renewing an insurance contract after implementation of the program, or participating in the small employer market (Sec. 3, Art. 3.51and Sec. 26.036). It is the opinion of the Office of House Bill Analysis that the reference to Section 26.036 is a reference to Article 26.036. The bill amends the Education Code to prohibit a school district from making group health coverage available to employees after the date the program is implemented. A school district is required to commence participation in the program on the first day of the first school year following the program's implementation or the date on which the school district's contract for group health insurance coverage expires, whichever is the later date (Sec. 22.004). The bill requires TRS to develop the plan or plans to be implemented and administered as set forth in this bill during the 2001-2002 school year. TRS is authorized to employ persons necessary to accomplish this goal. The bill requires ERS to enroll program participants beginning with the first school year for which the legislature makes the requisite appropriation of contributions (SECTION 6). EFFECTIVE DATE September 1, 2001. TRS is required to adopt rules, no later than December 31, 2001, to develop the plan or plans to be implemented by this bill during the 2001-2002 school year.