SB 0048 - Fiscal Note

Fiscal Note - SB 0048 - Allows small employers to participate in the Missouri State Employee Health Plan

COMMITTEE ON LEGISLATIVE RESEARCH

OVERSIGHT DIVISION

FISCAL NOTE

L.R. NO. 0141-01

BILL NO. SB 48

SUBJECT: Insurance

TYPE: Original

DATE: January 8, 1999

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FISCAL SUMMARY

ESTIMATED NET EFFECT ON STATE FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
General Revenue	($148,771)	$0 to ($269,048)	$0 to ($667,445)
Total Estimated Net Effect on All State Funds	($148,771)	$0 to ($269,048)	$0 to ($667,445)

ESTIMATED NET EFFECT ON FEDERAL FUNDS
FUND AFFECTED	FY 1999	FY 2000	FY 2001
None
Total Estimated Net Effect on All Federal Funds	$0	$0	$0

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 4 pages.

FISCAL ANALYSIS

ASSUMPTION

The Department of Social Services, Department of Insurance, Department of Corrections, Department of Conservation, Department of Transportation, and Department of Public Safety, Missouri State Highway Patrol assume this proposal would not fiscally impact their agencies.

Officials of the Missouri Consolidated Health Care Plan (HCP) state it is not possible to accurately predict the fiscal impact of this proposal because of the many uncertainties such as potential membership, contract rates, benefit structure, or administrative costs. HCP further states that board decisions would also be necessary concerning services provided by internal staff, those arranged through separate contracts, and commission fees. Information is available regarding what HCP experienced when public entities first entered the plan; however, this may or may not reflect activity with private employers, pending the final determination of the issues identified above. Based on current premiums, administrative fees, benefit design, and growth rate, HCP assumes the fiscal impact at $148,771 in FY00, $269,048 in FY01, and $667,445 in FY02.

HCP states the initial startup cost would be born by the state with no income revenue until employers begin joining the plan in January, 2000. However, at some point all of these costs would be repaid and the net cost would be zero. It is not known what type of repayment structure the board of trustees would adopt in repayment of initial startup costs. HCP notes the more aggressive the approach the faster the cost would be repaid through the administrative fees added to the premiums.

Oversight has ranged the fiscal impact from $0 to the amounts estimated by HCP for administrative costs in FY2000 and FY2001 to reflect the potential for recoupment of the cost in those years.

FISCAL IMPACT - State Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
GENERAL REVENUE FUND
Costs - Missouri Consolidated Health Care Plan
Startup costs fronted by state	($148,771)	$0 to	$0 to
		($269,048)	($667,445)
ESTIMATED NET EFFECT ON		$0 to	$0 to
GENERAL REVENUE FUND	($148,711)	($269,048)	($667,445)
FISCAL IMPACT - Local Government	FY 1999	FY 2000	FY 2001
	(10 Mo.)
	$0	$0	$0
FISCAL IMPACT - Small Business
Small businesses would be expected to be fiscally impacted to the extent that they would possibly incur reduced premium rates on health insurance. The reduction in premiums would cause small businesses to pay less for health insurance.

DESCRIPTION

This proposal would allow small employers to obtain medical coverage through the Missouri Consolidated Health Care Plan. Any employer with an average of 50 or fewer employees during the preceding calendar year would qualify as a small employer. The employer would be required to employ at least one person on the first day of the plan year, which would be a 12 month period designated by the plan's board and used to calculate rates. The plan's board would be authorized to administer the coverage provided to small employers, but would be required to maintain in a separate account all premiums and other income it receives from providing that coverage. In addition, the proposal would authorize any insurance agent licensed to sell accident and health insurance to sell the plan's coverage to small employers. The proposal has an effective date of January 1, 2000.

This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.

SOURCES OF INFORMATION

Department of Insurance

Department of Social Services

Department of Corrections

Department of Conservation

Department of Public Safety

Missouri State Highway Patrol

Missouri Consolidated Health Care Plan

Department of Transportation

Jeanne Jarrett, CPA

Director

January 8, 1999