Fiscal Note - SB 0426 - Establishes the Universal Health Assurance Program
L.R. NO. 1659-01
BILL NO. SB 426
SUBJECT: Health Care; Department of Health; Taxation and Revenue - General;
Taxation and Revenue - Income; Hospitals; Elections
TYPE: Original
DATE: March 20, 1997
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
General Revenue ($128,461,184 to ($256,865,098 to
($6,618,755) UNKNOWN) UNKNOWN)
Conservation $0 ($1,234,197) ($2,530,103)
Highway $0 ($3,593,217) ($6,584,005)
County Foreign
Insurance $0 $0 ($5,000,000)
General Revenue
Reimbursement $0 ($15,433,161) ($30,866,321)
Health Care Trust $0 (UNKNOWN) (UNKNOWN)
Health Professional
Education and
Training $0 $0 $0
Total Estimated
Net Effect on All ($148,721,759 to ($301,845,527 to
State Funds ($6,618,755) UNKNOWN) UNKNOWN)
*Does not include possible income and/or costs for Medicaid reimbursements.
ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Medicaid UNKNOWN UNKNOWN UNKNOWN
Total Estimated
Net Effect on All
Federal Funds UNKNOWN UNKNOWN UNKNOWN
ESTIMATED NET EFFECT ON LOCAL FUNDS
FUND AFFECTED FY 1998 FY 1999 FY 2000
Local Government (UNKNOWN) (UNKNOWN) (UNKNOWN)
FISCAL ANALYSIS
ASSUMPTION
This proposal would become effective if approved by the voters in the general
election to be held on the Tuesday following the first Monday in November,
1997. Sections 1 through 16 would become effective April first of the year
following notice to the revisor of statutes that a waiver had been obtained
from the Secretary of the Department of Health and Human Services. The
health premium surcharge and the income tax surcharge would apply to all tax
years beginning on or after January first of the year following receipt of
notice that appropriate waivers had been obtained. The small employer tax
credits would apply to five consecutive tax years beginning on or after
January first of the first year following notice by the revisor of statutes
that appropriate waivers had been obtained.
Officials from the Office of Lieutenant Governor, the House of
Representatives, the Department of Corrections, the Department of Economic
Development, the Office of State Courts Administrator, the Office of State
Auditor, the Department of Higher Education, the Department of Health, the
Department of Labor and Industrial Relations, and the Office of State
Treasurer assume this proposal would not fiscally impact their agencies.
Officials of the Office of Secretary of State (SOS) note that under current
law, the state would be responsible for paying the election costs if the
election were to take place in November, 1997, as required by this proposal.
The state would be responsible for paying costs approximately $4,678,300.
Officials of the Department of Revenue (DOR) assume they would need the
following additional FTE within the Division of Taxation and Collection to
implement this proposal:
Ten (10) Audit Clerks II - These employees would be responsible for the mail
extraction and pre-sort of 1.3 million employers forms and 2.3 million
returns.
Six (6) Clerks - These employees would be responsible for the additional
typing which would be created by implementation of the proposal.
Four (4) Tax Processing Technician I - These employees would be responsible
for the numbering, filming, and remittance processing of funds received on
1.3 million employers forms and 2.3 million returns.
Eight (8) Clerks II - These employees would be responsible for the numbering,
filming, and remittance processing of funds received on 1.3 million employers
forms and 2.3 million returns.
One (1) Photo Machine Operator - This employee would be responsible for
microfilming the additional documents which would be received.
Four (4) File Maintenance Clerks - These employees would be responsible for
the maintenance of returns received, pulling returns when requested, and
refiling returns.
Eight (8) Tax Service Representative I - These employees would be responsible
for pursuing delinquent and non-filer employers. They would be located in
the area offices.
One (1) Audit Clerk - This employee would be responsible for document flow to
the Revenue Agents in the area offices.
Twenty (20) Tax Processing Technician I - These employees would be
responsible for the pre-edit and exception processing, numbering, filming,
remittance processing of 1.3 million employers forms and 2.3 million returns.
Two (2) Tax Processing Technician II - These employees would oversee
different segments of the new section and report to the Section Supervisor.
Three (3) Clerk III - These employees would be responsible for work
performance and supervision of the Tax Processing Clerk II's, Clerk II's, Tax
Processing Technician I's, and Tax Processing Technician II's.
Two (2) Section Supervisors - These employees would be responsible for the
work performance and supervision of the three (3) Clerk III and would be
responsible for overseeing the processing of the new quarterly form in
addition to other management functions.
Six (6) Tax Collection Technician - These employees would be responsible for
handling incoming and outgoing telephone calls associated with billings and
non-filer notices.
Two (2) Data Entry Operator II's - These employees would be responsible for
data entry of information .
Four (4) Programmer Analyst II's - These employees would be responsible for
new programming and maintenance of programs.
One (1) Database Technician II - This employ would be responsible for
maintenance and assistance of the database.
TEMPORARY EMPLOYEES
Ten (10) Clerk II - 6 months - tax season
Ten (10) Tax Processing Technician I's - 6 months - tax season
Five (5) Clerk II's - 6 months - tax season
Overtime for ten (10 ) Tax Processing Technician I's - 4 months - tax season
Designated Principal Assistant - This employee would be responsible for
promulgating rules and regulations, systems development; technical
correspondence and supervision of the new section.
Clerk-Steno III - This employee would be responsible for the Bureau
Administrator's correspondence, telephones and payroll for the section.
TOTAL FTE REQUESTED: 84 FTE
25 TEMPORARY (6 MONTHS)
10 OVERTIME (4 MONTHS)
DOR's General Counsel's office would need one Associate Counsel to litigate
and resolve any legal disputes that were to arise as a result of the
proposal.
It is estimated that contract work would be needed at a cost of $2,390,300
for computer systems design, development, programming, testing, documenting
and implementing.
Contract costs are based upon probable rates charged by vendors doing
programming work for the State in the past and as such could vary depending
when bids were received.
Officials of the Office of Administration (COA) did not respond but under a
similar proposal this year they projected the income which would result from
the imposition of a surcharge on each individual's adjusted gross income
using an Individual Tax Simulator. The estimate of the tax base for the
health insurance premium surcharge was based on wage and salary data provided
by the U.S. Department of Commerce, Bureau of Economic Analysis (Annualized
1994 second quarter).
COA estimated the premium tax on employers would generate revenues of
$5,685,000,000 for the Health Care Trust Fund. In addition, COA estimated
the surcharge tax on individuals would generate $690,000,000 in revenues for
the Health Care Trust Fund.
Officials from COA - Division of Accounting noted that the gross wages paid
by the state in FY95 equalled $1,767,502,198. The 12.0% surcharge on that
amount would accrue to various funds and would have been $212,100,263 in
FY95. This figure included wages paid to employees of all state agencies and
would accrue to various state funds.
Officials from COA noted that the employer premium tax on wages would have a
direct effect on business and corporate income taxes by increasing operating
expenses. COA was not able to determine what the amount of lost business and
corporate income taxes would be.
Department of Social Services (DOS) noted that the waivers which would be
necessary to implement the proposal are beyond the scope of current Medicaid
waivers for which DOS has made application. DOS would begin the process of
obtaining the necessary waivers to implement this proposal upon approval by
the voters in November, 1997. Oversight assumes an anticipated implementation
date of January 1, 1999.
Based on DOS FY 95 budget for the provision of medical services through the
Medicaid program ($2,595,809,000), a base figure of $1,038,323,600 would be
used to estimate federal matching funds which would be deposited in the
General Revenue Fund annually for appropriation to the plan after the
required waiver would be obtained.
Oversight for purposes of this fiscal note has represented costs associated
with personal services and expense and equipment in the DOS - Division of
Medical Services (DMS) as being saved by the state because the state's
Medicaid program as it now exists would no longer be in place.
Depending on the provisions of the waivers, if obtained, some of the
functions of the DMS could be required to be performed by the Missouri
Universal Health Assurance Program.
Officials of the Office of Secretary of State (SOS) note that under current
law, the state would be responsible for paying the election costs
($4,000,000) if the election were to take place in November, 1997, as
required by this proposal. The state would be responsible for paying the
publication costs of approximately $678,300. These costs would be paid from
the General Revenue Fund.
The Department of Conservation (MDC) officials assume that salaries which
would be paid in FY 98 would result in an employer surcharge of approximately
$6,500,000 to the Conservation Commission Fund.
MDC officials note that for FY 98, their agency has budgeted $4,000,000 for
health care benefits for their employees which would be provided by a non-HCP
provider. This results in a net charge of approximately $2,500,000. With an
effective date of January 1, 1999, costs would be $1,029,000 in FY 99.
Officials of the Department of Transportation (DHT) assume that they would be
liable for the 12.0% employer surcharge on gross total wages of $191,020,609
(FY96). Further, they assume it would be unnecessary to continue the
Missouri Highway and Transportation Department and Missouri Highway Patrol
Medical and Life Insurance Plan. Therefore, a net cost of $3,610,590 in
FY99, and $6,615,838 in FY00.
The Department of Insurance (INS) officials estimate that the General Revenue
Fund and the County Foreign Insurance Tax Fund would lose funds annually due
to the loss of premium taxes on accident and health policies. The loss would
be shared on a fifty-fifty basis between the funds. For fiscal year 2000,
INS estimates approximately $10,000,000 would be lost.
Officials of the Department of Mental Health (DMH) assume that DMH
reimbursement funds would be deposited to the Missouri Health Care Trust Fund
(Trust) . DMH projects the amount of reimbursements that would be deposited
into the General Revenue Reimbursement Fund in FY98 to be $30,866,321. In
addition, this proposal would decrease funds that are currently being used to
provide behavioral health services. It does not, however, represent a loss
of funds to the state. These funds would be used to provide medical services
to persons through the Missouri Health Care Trust Fund. DMH assumes the
Trust would pay for medical expenses incurred by DMH clients presumably in
the same manner as DMH currently pays for these services. DMH staff that are
currently being used for these functions could also be lost. DMH estimates
the General Revenue Fund loss that would be transferred to the Trust to be
approximately $162,857,496 annually.
Officials from the Department of Natural Resources (DNR) assume that salaries
which would be paid in FY 97 would be $51,450,389 resulting in an employer
surcharge of $6,174,047 to DNR. DNR officials estimate this would result in
a net charge of $2,954,552 to the department and related funds.
Missouri Consolidated Health Care Plan (HCP) officials state the proposal
would require employers with more than 450 employees to pay 12% of payroll
into the insurance fund. The state's contribution for employee health care
would fall into this category. HCP estimates that the first year cost of
this program would be $36,732,298 more than the cost of the current medical
plan options. HCP assumes a six percent inflation factor in future fiscal
years.
Harris-Stowe State College did not respond but under a similar proposal last
year they assumed they would expect to incur additional costs of $375,425,
$386,688, and $398,288 for the next three fiscal years versus its current
health benefit program.
Officials from Central Missouri State University (CMSU) would expect to incur
health surcharge costs of approximately $5,700,000. Current health benefits
cost approximately $2,200,000 annually. This would result in an increased
cost of approximately $3,500,000 annually.
Lincoln University did not respond but under a similar proposal last year
officials stated they would expect to incur a net cost of $500,000 more per
year for the health premium surcharge versus their current health benefit
program.
Officials from Missouri Southern State College (MSSC) did not respond but
under a similar proposal last year officials expected to incur costs of
approximately $750,000 per year for the health premium surcharge .
Northwest Missouri State University (NWMSU) did not respond but under a
similar proposal last year officials reported the 9.0% health premium would
cost $1,665,159 annually. Their current health plan costs $852,913 per year
for an increased cost of $812,246.
Officials of the University of Missouri (UM) did not respond but under a
similar proposal last year they expected to incur a cost of $47,610,000 for
the health care surcharge. UM currently pays $22,800,000. This would be an
increased cost of $24,810,000.
Southeast Missouri State University (SEMU) did not respond but under a
similar proposal last year officials reported that the 12% surcharge would
result in costs of approximately $3,600,000 annually. The cost of its plan
is approximately $1,860,000 for an estimated increased cost of a $1,750,000.
Officials from Truman State University (TSU) report that the 12% surcharge
would result in costs of $3,592,955 annually. The cost of its current plan
is $1,706,155 for an increased cost of $1,886,800.
Southwest Missouri State University (SMSU) officials estimate they would
expect to incur a cost of $8,853,125 for the health care surcharge. SMSU
currently pays $2,485,438. This would be an increased cost of $6,367,687
annually.
Officials from Missouri Western State College (MWSC) estimate that the
surcharge would cost it approximately $1,550,000 annually.
The Office of Attorney General (AGO) officials assumed one FTE ($35,000),
fringe benefits ($9,986), and expense and equipment ($18,750) for the one
FTE.
Oversight assumes expense and equipment ($14,700) for office and
communication expenses and no additional furniture.
Health Care Financing Administration officials estimate that $3,355,423,000
attributable to Title XVIII benefits and $2,519,652,046 in Title XIX benefits
was paid to Missouri providers and beneficiaries in the federal fiscal year
1994.
Oversight assumes for purposes of this fiscal note:
1) Should the proposal be approved by the voters in a general election
in November, 1997, the health premium surcharge on employers and the
individual income tax surcharge would be levied on the wages paid or received
in the taxable year beginning January 1, 1998.
2) In accordance with projections made by DOS officials, the waiver
which would be required by this proposal would become effective prior to
January, 1999, and the federal financial participation for Medicaid and
Medicare would begin to accrue to the plan at that time.
3) In accordance with the provisions of this proposal, the Missouri
Universal Health Care Plan would become effective on April 1, 1999.
4) The state would pay both the surcharge and premiums for health care
coverage for employees from January 1, 1999, to April 1, 1999. Further, all
state-financed insurance plans would be dropped as of April 1, 1999.
5) Expenditures for health care in Missouri are in line with those
across the United States. The Health Care Financing Administration states
that the per capita expenditure for health care in the United States was
$3,191 in 1993 and can be used as a basis for projecting statewide costs.
The 1990 census of Missouri's population was 5,117,073. Further, increases
in health care costs since 1989 were nine percent annually.
6) Health care costs which would be covered by the plan and are
currently paid by state agencies from a number of funds which would accrue to
the Missouri Health Care Trust Fund and be saved by the current fund.
Further, these costs would be included in projections made based on per
capita cost of health care. Agencies affected would include the Department
of Elementary and Secondary Education, Department of Corrections, Department
of Labor and Industrial Relations, Department of Health, Department of Mental
Health, etc.
7) After April 1, 1998, growth in health care expenditures would be
limited to "2% above the total percentage increase in the state's gross
domestic product for the previous year".
FISCAL IMPACT - State Government FY 1998 FY 1999 FY 2000
(6 Mo.)
GENERAL REVENUE FUND
Income - Department of Social Services
Medicaid reimbursements $0 UNKNOWN UNKNOWN
Savings - Department of Social Services
Possible elimination or cutback in
Division of Medical Services $0 UNKNOWN UNKNOWN
Costs - Department of Revenue
Personal service (111 FTE) ($803,072) ($2,394,213) ($2,484,309)
Fringe benefits ($229,116) ($683,069) ($708,773)
Expense and equipment ($908,267) ($2,851,491) ($489,858)
Total Costs - Department of
Revenue ($1,940,455) ($5,928,773) ($3,682,940)
Loss - Department of Insurance
Foreign insurance premium tax $0 $0 ($5,000,000)
Costs - Secretary of State
Election costs ($4,678,300) $0 $0
Costs - Office of Administration
Fringe benefits $0 ($41,044,186) ($85,269,159)
Cost - Department of Mental Health
Medicaid General Revenue $0 ($81,428,748) ($162,857,496)
Costs - Office of Attorney General
Personal service (1 FTE) $0 ($35,875) ($36,772)
Fringe benefits $0 ($10,235) ($10,491)
Expense and equipment $0 ($13,367) ($8,240)
Total Costs - Office of Attorney General $0 ($59,477) ($55,503)
ESTIMATED NET EFFECT ON
GENERAL REVENUE FUND* ($128,461,184) ($256,865,098)
to to
($6,618,755) (UNKNOWN) (UNKNOWN)
*Does not include possible income and/or costs for Medicaid reimbursements.
CONSERVATION FUND
Costs - Department of Conservation
Fringe benefits $0 ($1,234,197) ($2,530,103)
ESTIMATED NET EFFECT ON
CONSERVATION FUND $0 ($1,234,197) ($2,530,103)
HIGHWAY FUND
Costs - Department of Highways and Transportation
Fringe benefits $0 ($3,593,217) ($6,584,005)
ESTIMATED NET EFFECT ON
HIGHWAY FUND $0 ($3,593,217) ($6,584,005)
COUNTY FOREIGN INSURANCE
TAX FUND
Loss - Department of Insurance
Foreign insurance taxes $0 $0 ($5,000,000)
ESTIMATED NET EFFECT ON
COUNTY FOREIGN INSURANCE
FUND $0 $0 ($5,000,000)
GENERAL REVENUE
REIMBURSEMENT FUND
Loss - Department of Mental Health
Medicaid funding $0 ($15,433,161) ($30,866,321)
ESTIMATED NET EFFECT ON
GENERAL REVENUE
REIMBURSEMENT FUND $0 ($15,433,161) ($30,866,321)
MISSOURI HEALTH CARE TRUST
FUND
Income - Office of Administration
Employer premium tax $0 $2,842,500,000 $5,685,000,000
Individual surcharge tax $0 $345,000,000 $690,000,000
Total Income - Office of Administration $0 $3,187,500,000 $6,375,000,000
Costs - Missouri Health Care Trust Fund
The plan could become effective on April 1, 1998, at which time costs to
administer the plan (staff, Board of Governor's expenses, Regional Advisory
Council expenses, etc.) and to provide health care benefits at costs which
would be negotiated by the Board of Governors, as specified in the proposal
would be borne by the Fund. Using HCFA per capita data, 1990 census figures
for Missouri and 9% annual increases in health care costs, it is projected
that expenditures from the Fund for benefits would equal $7,286,711,952 for
four months in FY98. Administrative costs would be capped at four percent of
the income generated from the various sources. A reserve equal to
expenditures in the preceding three months would be required.
ESTIMATED NET EFFECT ON MISSOURI
HEALTH CARE TRUST FUND $0 (UNKNOWN) (UNKNOWN)
*Does not include possible income and\or costs for Medicaid reimbursements.
HEALTH PROFESSIONAL EDUCATION
AND TRAINING FUND $0 $0 $0
FEDERAL FUNDS
DEPARTMENT OF SOCIAL SERVICES
Loss - Department of Social Services
Medicaid funding $0 (UNKNOWN) (UNKNOWN)
Savings - Department of Social Services
Possible elimination or cutback in
Division of Medical Services $0 UNKNOWN UNKNOWN
ESTIMATED NET EFFECT ON
FEDERAL FUNDS $0 UNKNOWN UNKNOWN
FISCAL IMPACT - Local Government FY 1998 FY 1999 FY 2000
(10 Mo.)
ALL LOCAL GOVERNMENTS
Costs - All Local Governments
Fringe benefits (UNKNOWN) (UNKNOWN) (UNKNOWN)
ESTIMATED NET EFFECT ON
ALL LOCAL GOVERNMENTS (UNKNOWN) (UNKNOWN) (UNKNOWN)
FISCAL IMPACT - Small Business
Small businesses would expected to be fiscally impacted to the extent that
they would incur additional administrative costs and additional payroll tax
expense due to the requirements of this proposal.
DESCRIPTION
This proposal would provide uniform health insurance coverage for all
Missourians. The program would be administered by a 19 member Board: 10
members appointed by the Governor with the advice and consent of the Senate,
6 of whom are health providers and 4 of whom represent the elderly,
employers, labor and the poor; six members are selected by and from the
regional health planning and policy development districts created in the
proposal; and the Directors of the Departments of Health, Social Services and
Mental Health shall serve as ex officio members. Members of the Board would
not be paid but would be reimbursed for expenses. The Board would establish
the budget, adopt fee schedules using 1996 as the base year, administer the
program and the fund created to finance health care, establish standards for
contracts with participating providers, and conduct utilization review. The
Board would develop a comprehensive state health care plan in cooperation
with the advisory councils. Every Missouri resident, and any person for whom
the Missouri health premium surcharge has been paid, would be eligible for
coverage. Certain services, including some cosmetic surgery, would not be
covered by the plan. Services to inpatients provided by institutional
providers would be reimbursed on the basis of global budgets approved by the
Board. Other providers would be reimbursed on a fee-for-service basis. The
fee schedule would be applied throughout the state, based upon rates that
would be negotiated with the professional association representing the
providers. Taxes received pursuant to this proposal, federal funds and state
general revenue appropriations would be placed in the Missouri Health Care
Trust Fund which would be created in this proposal. Employers would pay a
health premium surcharge based upon the total amount paid to all employees.
The rate would be: five percent for four or fewer employees; six percent for
five to 49 employees; eight percent for 50 to 99 employees; nine percent for
100 to 249 employees; ten percent for 250 to 499 employees; employers who
employ twenty-five or fewer employees would be eligible for a tax credit for
the first five years after the effective date of the tax in an amount of $25
per employee for the first year and diminishing by $5 per employee for each
subsequent year. All Missouri income taxpayers would also pay a surcharge:
if adjusted gross income is:
If Adjusted Gross Income is: Tax rate is:
$5,000 to $25,000 1.2% of AGI
$25,000 to 50,000 $150 + 1.8% of AGI over
$50,000 to $75,000 $450 + 2.7% of AGI over
$75,000 to $100,000 $900 + 3.15% of AGI over
Over $100,000 $1,425 + 3.6% of AGI
The proposal has a referendum clause which would submit the question to the
voters in November, 1997. The Board of Governors would be appointed within
thirty days of voter approval and the Department of Social Services would
apply to the federal government for the waivers necessary to fully implement
the proposal. Provisions of the proposal pertaining to the powers and duties
of the Board become effective on April 1 of the year following receipt of
notice by the Revisor of Statutes that a waiver has been obtained.
Provisions of the proposal imposing taxes would be effective on January 1 of
the year following the receipt of notice that the waivers have been obtained.
This legislation is not federally mandated and would not duplicate any other
program.
SOURCES OF INFORMATION
Department of Public Safety
Department of Economic Development
Horsing Racing Commission
Department of Labor and Industrial Relations
Office of State Courts Administrator
Office of the Governor
Missouri House of Representatives
Office of Lieutenant Governor
Department of Higher Education
Missouri Senate
Office of the State Treasurer
Office of the State Auditor
Department of Health
Office of Attorney General
Department of Conservation
Department of Natural Resources
Department of Highways and Transportation
Department of Insurance
Office of Administration
Department of Social Services
Department of Revenue
Department of Mental Health
Office of Secretary of State
Central Missouri State University
Northeast Missouri State University
Northwest Missouri State University
Southwest Missouri State University
Missouri Western State College
Health Care Financing Administration
Missouri Consolidated Health Care Plan
This Fiscal Note is not an official copy and should not be quoted or cited.