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.