HBA-MSH H.B. 1237 77(R)    BILL ANALYSIS


Office of House Bill AnalysisH.B. 1237
By: Isett
Pensions & Investments
3/12/2001
Introduced



BACKGROUND AND PURPOSE 

Medical savings accounts have been suggested as an possible solution to
rising medical costs.  The medical savings accounts concept provides
catastrophic insurance with a high deductible and then creates an untaxed
medical savings account that builds over time.  The account is used for
smaller medical expenses and for paying the deductible for any major
expenses.  Upon retirement or termination of employment any remaining money
is paid to the account holder.  Since the account holder is spending his or
her own money, he or she is less likely to make unnecessary expenditures.
Health care spending decisions are made by the account holder in
consultation with  a health care provider.  House Bill 1237 creates a
medical savings account pilot program for the Employment Retirement System. 

RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that rulemaking
authority is expressly delegated to the Employee Retirement System of Texas
in SECTION 1 (Article 3.50-2B, Insurance Code) and SECTION 2 of this bill. 

ANALYSIS

House Bill 1237 amends the Insurance Code to require the Employee
Retirement System of Texas (ERS) to adopt by rule a medical savings account
pilot program for health care coverage to be offered as a health benefits
plan option for state employees in lieu of the health benefits plan
currently provided.  The bill limits participation in the pilot program to
less than five percent of the number of full-time state employees.  The
bill requires ERS by rule to set guidelines for participation in the
program and to solicit at least three bids for the development and
establishment of the pilot program.   The bill requires the pilot program
to provide health benefits comparable in quality to health benefits
currently provided by ERS and establish annual deductibles for
participating employees of between $1,500 and $3,000, with no copayment
required after the employee has met the applicable annual deductible.  The
bill specifies that the provisions expire August 31, 2007. 

ERS is requires to adopt rules as necessary to implement this Act no later
than March 1, 2002.  ERS is required to make the medical savings account
pilot program available for employee participation no later than September
1, 2002. 

EFFECTIVE DATE

September 1, 2001.