HBA-JEK C.S.H.B. 3343 77(R)    BILL ANALYSIS


Office of House Bill AnalysisC.S.H.B. 3343
By: Sadler
Teacher Health Insurance, Select
4/26/2001
Committee Report (Substituted)



BACKGROUND AND PURPOSE 

Since 1991, school districts have been required to provide health insurance
to school district employees that is comparable to the insurance offered
under the Texas Employees Uniform Group Insurance Program.  Health
insurance costs for public school employees vary from district to district,
and small and rural districts, in particular, struggle with rising premium
costs and limited access.  School districts that pay little to none of the
coverage costs may find it more difficult to attract and retain qualified
employees.  Individually, school districts, employees, and the state have
limited resources with which to fund the rising costs of health insurance
for school employees; however, contributions from a combination of these
sources may lead to a stronger health insurance plan.  C.S.H.B. 3343
establishes a uniform group coverage program for school district employees
with funds from state, district, and employee contributions. 

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 1.01 (Sections 3, 4, 5, 6, 7, and 9, Article 3.50-7, Insurance
Code) and SECTION 1.02 (Section 4, Article 3.50-8, Insurance Code) and to
the commissioner of education in SECTION 1.05 (Section 42.253, Education
Code) of this bill. 

ANALYSIS

C.S.H.B. 3343 amends the Insurance, Education, Tax, Health and Safety, and
Government codes to create the Texas School Employees Uniform Group Health
Coverage Act and to establish the uniform group coverage program (program)
for Texas school district employees to be funded by state, district, and
employee contributions. 

Uniform Group Coverage Program

C.S.H.B. 3343 amends the Insurance Code to require the Teacher Retirement
System of Texas (TRS), as trustee, to implement and administer the program.
The bill requires TRS to develop the enrollment requirements for the
program during the 2001-2002 school year, with coverage beginning September
1, 2002.  The bill authorizes TRS to hire and compensate employees,
contract with a qualified firm to act in the capacity of independent
administrators and managers of the program, and enter into interagency
contracts with any agency of the state.  The bill provides that TRS has the
powers with regard to the program that the Employees Retirement System of
Texas (ERS) has in administering the Texas Employees Uniform Group
Insurance Benefits Act, including the power to adjudicate claims, expel
participants from the program for cause, and adopt rules to administer the
program (SECTION 1.01, Sec. 3, Art. 3.50-7 and SECTION 3.01). 

Group Coverages

C.S.H.B. 3343 requires TRS by rule to establish plans of group coverages
for employees participating in the program beginning September 1, 2001.
The bill provides that the plans must include at least two tiers of group
coverage, ranging from the catastrophic care coverage plan to the primary
care coverage plan.  The bill requires TRS by rule to define the
requirements of each coverage plan and tier of coverage and to prescribe by
rule the coverage provided under the catastrophic care coverage plan.  The
bill provides that the coverage under the catastrophic care plan must be at
least as extensive as the coverage provided under the TRS-Care 2 plan and
that the primary care coverage plan must be comparable in scope and, to the
greatest extent possible, in cost to the coverage provided by ERS to state
employees.  The bill provides that comparable coverage plans of each tier
of coverage must be offered to employees of all participating entities and
prohibits coverage under the program from being subject to a preexisting
condition limitation. The bill authorizes TRS to provide a cafeteria plan
for employees of participating entities (SECTION 1.01, Sec. 4, Art. 3.50-7
and SECTION 3.01). 

Participation

C.S.H.B. 3343 requires each school district with 500 or fewer employees and
each regional education service center to participate in the program as of
September 1, 2002.  The bill authorizes a school district with more than
500 but not more than 1,000 employees to elect to participate in the
program as of September 1, 2002.  Such a district must notify TRS of the
election not later than September 30, 2001. The bill authorizes any school
district with more than 500 employees to elect to participate in the
program as of September 1, 2005.  Such a district must notify TRS of the
election not later than January 1, 2005, and is required to apply for
participation in the manner prescribed by TRS by rule (SECTION 1.01, Sec.
5, Art. 3.50-7 and SECTION 3.02).  The bill provides that a charter school
is eligible to participate in the program if the school agrees to the open
records requirements regarding the program and to an audit of its accounts
relating to the program.  A charter school must notify TRS of its intent to
participate in the program in the manner and within the time required by
TRS rule (SECTION 1.01, Sec. 6, Art. 3.50-7).  

C.S.H.B. 3343 provides that participation in the program is limited to
employees of participating entities who are full-time employees and to
part-time employees who are participating members in TRS.  Such an employee
who applies for coverage during an open enrollment period prescribed by TRS
is automatically covered by the catastrophic care coverage plan unless the
employee specifically waives coverage, selects a higher tier coverage plan,
or is expelled from the program.  The bill provides that a part-time
employee of a participating entity who is not a participating member in TRS
is eligible to participate in the program only if the employee pays all of
the premiums and other costs associated with the health coverage plan the
employee selects (SECTION 1.01, Sec. 7, Art. 3.50-7).  

Fund

C.S.H.B. 3343 establishes the Texas school employees uniform group coverage
trust fund (fund) with the comptroller of public accounts.  The fund
consists of all contributions made from employees, participating entities,
and the state for coverage under the program, as well as contributions made
by employees or participating entities for optional coverages, investment
income, any additional amounts appropriated by the legislature, and any
other money required or authorized to be paid into the fund.  The bill
authorizes TRS to invest assets of the fund as assets are invested for each
statewide benefit system, and authorizes TRS to use amounts in the fund
only to provide group coverages and to pay the administrative expenses of
the program (SECTION 1.01, Sec. 8, Art. 3.50-7).  

Health Coverage Contributions

C.S.H.B. 3343 requires the state to contribute $75 a month for each
employee of a covered entity who participates in a group health coverage
plan provided by or through the covered entity.  The bill requires the
state contributions to be deposited in the fund or another fund established
for the payment of school employee health coverages.  The bill requires a
charter school or regional education service center to make contributions
for the program as provided by TRS rule (SECTION 1.01, Sec. 9, Art. 3.50-7
and SECTION 1.03, Sec. 2, Art. 3.50-9). 

The bill requires a school district to make health coverage contributions,
for each fiscal year, in an amount  that is equal to $1,800 for each of its
participating employees.  The bill authorizes a school district to use
specified funds received under the foundation school program to meet the
district's contribution requirements (SECTION 1.01, Sec. 9, Art. 3.50-7 and
SECTION 1.04, Sec. 3, Art. 3.50-10).   

The bill requires a school district that shared with its employees the cost
of coverage under a group benefits plan for the 2000-2001 school year to
deposit in the appropriate fund for each of its employees, for each fiscal
year, an amount at least equal to the average amount that the district paid
for each employee during the 2001-2002 school year (SECTION 1.04, Sec. 2,
Art. 3.50-10).  The bill provides that, for any state fiscal year, a school
district that imposes maintenance and operations taxes at the maximum rate
permitted is entitled to state funds in an amount equal to the difference
between $1,800 per employee and the amount based on the average amount per
employee the district paid in 2001-2002.  For the state fiscal years
beginning September 1, 2002, through September 1, 2007, school districts
are entitled to state assistance to meet contribution requirements in the
amounts set forth in the bill (SECTION 1.04, Sec. 4, Art. 3.5010).  If the
amount a school district is required to use to provide health coverage for
a fiscal year exceeds the $1,800 minimum for each employee, the bill
authorizes the district to use the difference only to provide employee
compensation, benefits, or both (SECTION 1.04, Sec. 5, Art. 3.50-10). 

The bill requires an employee covered by the program to pay the portion of
the cost of the coverage selected by the employee not paid by the state or
the school district (SECTION 1.01, Sec. 9, Art. 3.50-7). 

Health Coverage or Compensation Supplementation 

C.S.H.B. 3343 requires TRS to deliver to each school district, eligible
charter school, and regional education service center each year state funds
in an amount equal to the product of the amount provided by appropriation
multiplied by the number of district, school, or regional education service
center employees.  These supplemental funds are to be held in trust for the
benefit of each employee and to be distributed to each employee in equal
monthly installments.  The bill requires each employee to elect whether the
supplemental funds are to be placed into a health care reimbursement
account, paid to the employee as supplemental compensation, used by the
district, school, or regional education service center to pay for optional
health care coverage for the employee or the employee's dependents, or
divided among the options.  Each state fiscal year, the bill requires a
school district, eligible charter school, or regional education service
center to prepare and distribute to each employee a written explanation of
the options the employee may elect.  The bill sets forth deadlines for the
distribution of the written explanation and election form and for the
election by an employee.  The bill authorizes TRS to adopt rules to
implement the provisions regarding supplementation (SECTION 1.02, Secs.
2-4, Art. 3.50-8).  The bill amends the Government Code to provide that
funds the employee elects to receive as supplemental compensation are
excluded from salary and wages for the purposes of determining a TRS
member's contribution and benefits (SECTION 2.17, Sec. 822.201). 

CHIP Coverage

C.S.H.B. 3343 amends the Health and Safety Code to authorize a child of an
employee of an eligible charter school, school district, or regional
education service center to be enrolled in health benefits coverage under
the child health plan (CHIP), and to require the cost of health benefits
coverage for such children to be paid by the state as provided in the
General Appropriations Act.  The bill prohibits expenditures made to
provide health benefits coverage for such children under CHIP from being
included for the purpose of determining the state CHIP expenditures as
defined by federal law (SECTION 1.07, Sec. 62.1015). 

Tax Rates

For any school year beginning with the 2003-2004 school year and ending
with the 2008-2009 school year, C.S.H.B. 3343 amends the Education Code to
authorize a school district to increase its maintenance and operations tax
rate above the cap as necessary to comply with the contribution
requirements of this bill.  The bill authorizes the commissioner of
education to adopt rules necessary to administer this provision  and
specifies that this provision expires September 1, 2009 (SECTION 1.05, Sec.
42.253).   

The bill amends the Tax Code to set forth provisions regarding the rollback
tax rate of a school district that is required to increase its maintenance
and operations tax rate in any of the tax years between 2003 and 2008 to
comply with the bill's minimum contribution requirements (SECTION 1.06,
Sec. 26.08). 

Transition Provisions

C.S.H.B. 3343 amends the Insurance and Education codes to prohibit entities
participating in the program from procuring or renewing health insurance
contracts, participating in the small employer market, or purchasing
additional group health coverage (SECTION 2.14, Sec. 3, Art. 3.51,
Insurance Code and SECTION 2.15, Art. 26.036, Insurance Code and SECTION
2.16, Sec. 22.004, Education Code). 

C.S.H.B. 3343 amends the Insurance Code to repeal provisions authorizing
participation by active employees in the Texas public school employees
group insurance program (group program) for retirees (SECTION 2.18).  The
bill provides for the transfer of records relating to active employees from
the group program for retirees to the program established under the bill
(SECTION 2.01, Sec. 3A, Art. 3.50-4). 

EFFECTIVE DATE

September 1, 2001.  SECTIONS 2.02-2.13, 2.17, and 2.18 of the Act take
effect September 1, 2002. 

COMPARISON OF ORIGINAL TO SUBSTITUTE

C.S.H.B. 3343 differs from the original bill by removing the Texas School
Employees Uniform Group Benefits Act, which created a statewide plan to
cover all public school employees and retirees through increased taxes.
The substitute adds the Texas School Employees Uniform Group Health
Coverage Act, which creates a plan to cover the employees of small school
districts, eligible charter schools, and regional education service centers
with state, district, and employee contributions, and sets forth a schedule
for the phasing in of larger school districts that choose to participate in
the program.