This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0907 - Creates the Missouri Children's Health Insurance Program
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 3881-01
BILL NO. SB 907
SUBJECT: Creates the Missouri Children's Health Insurance Program
TYPE: Original
DATE: March 2, 1998
FISCAL SUMMARY
|
ESTIMATED NET EFFECT ON STATE FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| General Revenue | ($33,434,848) | ($75,533,278) | ($104,545,079) |
| Total Estimated
Net Effect on All State Funds |
($33,434,848)* | ($75,533,278) | ($104,545,079) |
* $14,519,776 in costs have already been included in the FY99 executive budget for providing coverage to persons at 200% of federal poverty guidelines.
|
ESTIMATED NET EFFECT ON FEDERAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| Federal | ($86,574,651) | ($75,998,668) | ($55,354,680) |
| Total Estimated
Net Effect on All Federal Funds |
($86,574,651)* | ($75,998,668) | ($55,354,680) |
* $39,257,171 in costs have already been included in the FY99 executive budget for providing coverage to persons at 200% of federal poverty guidelines.
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 1999 | FY 2000 | FY 2001 |
| Local Government | $0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 9 pages.
FISCAL ANALYSIS
ASSUMPTION
Officials from the Department of Health, Department of Insurance, Department of Transportation, Department of Conservation, Office of Administration, and the Missouri Consolidated Health Care Plan assume this proposal will not fiscally impact their agencies.
Officials from the Department of Mental Health (DMH) assume this proposal will not fiscally impact their agency. The DMH indicated the proposal does not indicate the coverage that would apply to the insurance. Therefore, the DMH cannot estimate the value of services DMH provides that would be covered. In addition, the DMH cannot estimate the number of clients that would opt to purchase this insurance. For each client covered under this insurance, the DMH would save an unknown amount of General Revenue dollars that would have otherwise been spent on that client. However, the DMH notes that all divisions have a waiting list of clients that could be served if more dollars were available. Because the DMH would be able to serve more clients with the General Revenue dollars available, the DMH assumes no "net" fiscal impact. DMH also indicated that under the 1115 waiver that has been submitted, children under 300 % of poverty would be covered under Medicaid. Therefore, if Medicaid coverage is available for these clients, they would unlikely opt to purchase the insurance this proposal is offering.
Officials from the Department of Social Services - Division of Legal Services (Legal) assume that 123,000 persons in FY 99 will qualify under this proposal. Legal also assumes that 1% of persons over the 123,000 apply for services, but do not qualify. These persons would be entitled to a hearing to contest the disqualification for Medicaid coverage. This would result in approximately 1,230 people who applied but were denied this benefit. Legal assumes one (1) FTE Hearing Officer ($32,004) can conduct 1,320 hearings (5 hearings per day x 22 days per month x twelve months per year). The hearing officer would conduct hearings and write decisions. One-half (.5) FTE Clerk Typist II ($15,002) would schedule hearings, send notices, and type decisions. Equipment ($4,250) would include office furniture and a computer. Expenses would include office expenses and travel expenses.
Officials from the Department of Social Services - Division of Data Processing (DDP) state that record retention would be necessary for approximately 165,000 individuals per year. DDP states that data storage would be for a minimum of .25 gigabytes. Two (2) FTE Computer Information Specialist II's ($28,008) would be utilized for design and programming work. DDP states this would include development of the initial process of record retention and the on-going maintenance of the records within the system. Equipment ($13,942) would include systems furniture and additional disk space. Expenses ($300) would be for office supplies.
ASSUMPTION (continued)
Officials from the Department of Social Services (DOS) - Division of Family Services (DFS) assume that the DOS - Division of Medical Services (DMS) is granted the waiver from the U.S. HHS-Health Care Financing Administration (HCFA) to allow for Medicaid coverage for children up to 300% of the federal poverty guideline. The DFS assumes any potential co-payment information referred to in this proposal will be addressed by the DOS-DMS. The DFS assumes the DFS will establish eligibility guidelines, determine eligibility, and maintain the eligible cases once qualified. The DFS assumes that 123,576 children will qualify for services in FY 99 under this proposal. This amount is based upon information supplied by the DMS. The DFS assumes they will need 114 additional FTE to achieve the goal. The DFS assumes for children under 300% of poverty, they will need two person per case with workers carrying a caseload of 544 cases. The DFS indicates they will need 11 supervisor I's, 21 clerical support staff, and 3 supervisor III's for the additional caseworker staff. The DFS assumes the staff will require the usual expense and equipment items. The costs are generally split 25% state and 75% federal.
Officials from the Department of Social Services - Division of Medical Services (DMS) assume the proposed legislation requires the DMS to seek approval for the federal Children's Health Insurance Program (CHIP) established through the Balance Budget Act of 1997. Populations covered under the proposal from FY 99 would be as follows:
Federal
Poverty Total Percentage of Expected
Status Ages Level Population Participation Population
Uninsured,NonMed. 0-1 235% 1,426 75% 1,070
Uninsured, NonMed 1-18 200% 54,220 75% 40,665
Insured,NonMedicaid 1-5 133 to 150% 11,230 50% 5,615
Insured,NonMedicaid 6-18 100 to 150% 88,667 50% 44,333
Insured,NonMedicaid 0-1 185 to 235% 5,875 25% 1,469
Insured,NonMedicaid 1-18 150 to 200% 121,696 25% 30,424
TOTALS 0-18 283,114 123,576
The DMS assumes no reductions in the populations for those excluded from coverage by the proposed legislation (inmates, patients of institutes for mental disease, and state employee children). It is assumed these populations would be nominal. In addition, the DMS assumes 50% of currently insured children below 150% of poverty will drop private insurance to be covered under the program. The DMS assumes that 25% of children between 150% and 200% of poverty will drop their private insurance for this new program. These populations will drop insurance because the proposed legislation contains no crowd-out provisions.
ASSUMPTION (continued)
The DMS assumes the CHIP plan would be completed and approved by the U.S. Department of Health and Human Services by the October 1, 1999 deadline. The DMS assumes there would be some administrative burden to contract with two insurers and two health maintenance organizations (HMO) with a start date of October 1, 1998. The cost for coverage was assumed to equal the Blue Cross/Blue Shield program, however, contracting with at least two insurers and two HMO's could result in a higher cost per person.
The new CHIP program would require the DMS to submit actuarially sound data to the federal government for approval. According to an actuarial firm, actuarial numbers for a CHIP program would cost between $170,000 and $300,000. The DMS assumes it would cost $235,000. The DMS assumes the new program would be run similar to the Missouri Plus (MC+) program and has based their staffing and expense and equipment needs from the MC+ program.
The DMS assumes there would be no cost sharing for children with family incomes less than 150% of poverty. The CHIP language in the federal Balance Act of 1997 prohibits cost-sharing
from this population. For the children with family incomes in excess of 150% of poverty, the DMS assumes a co-payment of $10 a visit. The number of visits is estimated at 1,070,609 visits per year for a population of 42,446 children. In addition, the DMS assumes that children between 150 and 200 % of poverty would be charged $50 as a premium per month for health insurance coverage. A total of 42,446 children would be assessed the $50 per moth premium payment.
The DMS assumes a benefit package similar to the Blue Cross/Blue Shield program would be used. The fiscal impact, according to the DMS is as follows:
FY 99 FY 00 FY 01
Medical Costs
Population 123,576 124,639 125,711
Blue Cross/Blue Shield rate $116.19 $120.84 $125.67
Months in program 10 12 12
Total Health insurance costs $143,582,954 $180,736,521 $189,577,216
Cost Sharing
Number of visits per month 89,217 89,217 89,217
Co-pay per visit $10 $10 $10
Months in the program 10 12 12
Total Co-payments $8,921,742 $10,706,090 $10,706,090
ASSUMPTION (continued)
Cost Sharing (continued)
Population required to pay premiums 42,446 42,811 43,179
Cost of premium per month $50 $50 $50
Months in program 10 12 12
Total Premiums $21,223,000 $25,686,672 $25,907,599
Total Cost-Sharing Revenue $30,144,742 $36,392,762 $36,613,689
Oversight, for the purposes of this fiscal note, will net the costs of the health insurance with the revenue from the co-payments and premiums in order to better reflect the net fiscal effect of the proposal.
Administration
Actuarial cost to implement $235,000 $0 $0
Staff to run CHIP program 40.25 FTE $946,634 $1,164,359 $1,193,468
Staff for premium collection 8 FTE $123,082 $151,391 $155,176
Total Administration Costs $1,304,716 $1,315,750 $1,348,644
Federal funding for the CHIP program is limited to $51,686,736 for the first four years and then it decreases. The funding is available at an enhanced match rate to Missouri of 72.17%. The funds can be used for up to three years starting with FY98. The funds from FY 98 and FY99 could be used for the ten month period for FY99. After the first year of the program, there would only be federal funds of $51,686,736. The proposal would require $20,865,694 in general revenue to receive the federal funds. Funding exceeding a total cost of $72,522,430 will need to be funded with general revenue only.
Oversight has stated the cost of the proposal as $147,531,946 annually (FY99 costs). Oversight notes that the DOS has included the costs of coverage of the eligible population up to 200% of poverty in the state fiscal year 1999 budget. The DOS has included $53,776,947 in the FY 99 budget for this coverage. Future funding would be subject to appropriation.
Oversight assumes the $53,776,947 included in the FY 99 executive budget is split between state and federal funds at a ratio of 27% state and 73% federal, based on the DMS response noted above.
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| GENERAL REVENUE FUND | |||
| Costs - Department of Social Services | |||
| Division of Family Services | |||
| Personal service (149 FTE) | ($870,743) | ($1,071,443) | ($1,098,229) |
| Fringe benefits | ($244,089) | ($300,326) | ($307,833) |
| Expense and equipment | ($235,174) | ($46,766) | ($47,128) |
| Total Costs - Division of Family Services | ($1,349,987) | ($1,417,524) | ($1,453,191) |
| Costs - Department of Social Services | |||
| Division of Data Processing | |||
| Personal service (2 FTE) | ($13,397) | ($16,478) | ($16,890) |
| Fringe benefits | ($3,755) | ($4,618) | ($4,734) |
| Expense and equipment | ($4,044) | ($271) | ($279) |
| Total Costs - Division of Data Processing | ($21,196) | ($21,367) | ($21,903) |
| Costs - Department of Social Services | |||
| Division of Legal Services | |||
| Personal service (1.5 FTE) | ($20,238) | ($24,903) | ($25,526) |
| Fringe benefits | ($5,673) | ($6,980) | ($7,155) |
| Expense and equipment | ($7,786) | ($6,474) | ($6,668) |
| Total Costs - Division of Legal Services | ($33,697) | ($38,357) | ($39,349) |
| Costs - Department of Social Services | |||
| Division of Medical Services | |||
| Personal service (24 FTE) | ($297,702) | ($667,142) | ($1,348,644) |
| Fringe benefits | ($83,446) | ($187,000) | ($378,025) |
| Expense and equipment | ($78,965) | ($13,378) | ($27,176) |
| Net Health Insurance Costs/Revenue | ($31,569,855) | ($73,188,510) | ($101,276,791) |
| Total Costs - Division of Medical Services | ($32,029,968) | ($74,056,030) | ($103,030,636) |
|
ESTIMATED NET EFFECT ON |
|||
| GENERAL REVENUE FUND | ($33,434,848) | ($75,533,278) | ($104,545,079) |
| FISCAL IMPACT - State Government | FY 1999 | FY 2000 | FY 2001 |
| (continued) | (10 Mo.) | ||
| FEDERAL FUNDS | |||
| Costs - Department of Social Services | |||
| Division of Family Services | |||
| Personal service (149 FTE) | ($2,132,797) | ($2,624,390) | ($2,690,000) |
| Fringe benefits | ($697,823) | ($736,616) | ($764,007) |
| Expense and equipment | ($605,523) | ($136,267) | ($131,385) |
| Total Costs - Division of Family Services | ($3,436,143) | ($3,497,273) | ($3,585,392) |
| Costs - Department of Social Services | |||
| Division of Data Processing | |||
| Personal service (2 FTE) | ($34,449) | ($42,372) | ($43,430) |
| Fringe benefits | ($9,656) | ($11,877) | ($12,173) |
| Expense and equipment | ($10,398) | ($697) | ($717) |
| Total Costs - Division of Data Processing | ($54,503) | ($54,946) | ($56,320) |
| Costs - Department of Social Services | |||
| Division of Legal Services | |||
| Personal service (1.5 FTE) | ($13,492) | ($16,602) | ($17,017) |
| Fringe benefits | ($3,782) | ($4,654) | ($4,770) |
| Expense and equipment | ($5,191) | ($4,316) | ($4,446) |
| Total Costs - Division of Legal Services | ($22,465) | ($25,572) | ($26,232) |
| Costs - Department of Social Services | |||
| Division of Medical Services | |||
| Personal service (24 FTE) | ($772,014) | ($648,608) | $0 |
| Fringe benefits | ($216,396) | ($181,805) | $0 |
| Expense and equipment | ($204,772) | ($13,006) | $0 |
| Net Health Insurance Costs/Revenue | ($81,868,358) | ($71,155,249) | ($51,686,736) |
| Total Costs - Division of Medical Services | ($83,061,540) | ($71,998,668) | ($51,686,736) |
|
ESTIMATED NET EFFECT ON |
|||
| FEDERAL FUNDS | ($86,574,651) | ($75,998,668) | ($55,354,680) |
| FISCAL IMPACT - Local Government | FY 1999 | FY 2000 | FY 2001 |
| (10 Mo.) | |||
| $0 | $0 | $0 | |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal will require the Department of Social Services to set up the Missouri Children's Health Insurance Program upon approval by the Secretary of the U.S. Department of Health and
Human Services. The Department will enter into contracts with at least two insurers and at least two HMOs that offer a children's health plan.
The state will pay for the child's private health insurance coverage provided that the insurer offers a health plan to low income children without regard to health status or preexisting conditions. Qualified children's health plans shall at a minimum contain coverage equivalent to either:
(a) The standard health services corporation preferred provider option under the Federal Employees Health Benefit Plan (Blue Cross/Blue Shield); or
(b) A health benefits coverage plan generally available to state employees; or
(c) A health insurance package offered by the HMO organization that has the largest insured commercial, non-Medicaid enrollment in Missouri; or
(d) a health insurance coverage that has been approved by the U.S. Secretary of Health and Human Services.
Premiums, deductibles, and cost-sharing amounts for children whose family income is below 150% of the federal poverty level shall not exceed the monthly charge permitted under Title XIX of the Social Security Act (Medicaid). Children whose family income is greater than 150% shall have deductibles, premiums, and other cost-sharing amounts imposed on a sliding scale. However, total cost-sharing for low-income families shall not exceed 5% of such family's income for the year involved. Eligible children shall be allowed to change enrollment between participating insurers upon an annual coverage renewal date.
This legislation is not federally mandated, would not duplicate any other program and could require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Social Services
Department of Health
Department of Mental Health
Department of Conservation
Department of Transportation
Department of Public Safety - Division of Highway Patrol
Department of Insurance
Department of Revenue
Office of Administration
Missouri Consolidated Health Care Plan
Jeanne Jarrett, CPA
Director
March 2, 1998