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F I S C A L I M P A C T R E P O R T

SPONSOR Lopez

DATE TYPED 03/03/05 HB

SHORT TITLE Retiree Health Care Authority Eligibility

SB 326/aSPAC

ANALYST Geisler

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

See narrative

(Parenthesis ( ) Indicate Expenditure Decreases)

Relates to: SB 296

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Retiree Health Care Authority (RHCA)

Health Policy Commission (HPC)

SUMMARY

Synopsis of SPAC Amendments

The Senate Public Affairs Committee amendments to Senate Bill 326 delete changes proposed in

the bill to expand the eligibility for the senior prescription drug card program.

Synopsis of Original Bill

Senate Bill 326 proposes two major changes to the retiree health care act.

1) Adds former governing authority members to plan. Sections 1-2 would allow “former par-

ticipating employer governing authority members” who have served a participating employer for

at least four years to participate in the RHCA program and requires them to pay monthly premi-

ums of one-twelfth of the annual cost of claims and administration allocated to the member by

the board, plus the monthly participation fee set by the board, as was enacted for legislators in

the 2003 session.

Senate Bill 326/aSPAC -- Page 2

2) Expands eligibility for Senior Prescription Drug Program. Section 3 would amend eligibility

requirements for the Senior Prescription Drug Program to delete the age requirement and open it

up to all residents of New Mexico.

Significant Issues

“Former participating employer governing authority members” are typically former members of

school boards, city councils, and county commissions.

The Senior Prescription Drug Program offers discounts on prescriptions to cardholders. The

program is structured to operate off revenues received from mail order rebates ($2.00 per pre-

scription filled).

FISCAL IMPLICATIONS

Since the new class of eligible retirees would pay 100% of their costs under the RHCA program,

it is not anticipated that there would be any fiscal implications for this agency.

Since the Senior Rx costs will be paid via mail order rebates, it is not anticipated that there will

be fiscal implications.

ADMINISTRATIVE IMPLICATIONS

There will be some additional workload to RHCA to enroll former governing authority members

who decide to join the program. Expanding the eligibility for the Senior Rx program will cause

enrollments to spike, causing additional work, but once members are enrolled the RHCA plays

little further role; administration is handled by RHCA’s pharmacy benefit manager.

CONFLICT, DUPLICATION, COMPANIONSHIP, RELATIONSHIP

Senate Bill 296 contains identical provisions regarding former participating employer governing

authority members , but does not address Senior Prescription Drug Program eligibility.

OTHER SUBSTANTIVE ISSUES

HPC notes that a person that retires from a governing authority after four years may be of any

age and still be eligible for RHCA benefits. Although the premiums charged these members are

supposed to cover the costs, HPC expresses concern that the retiree health care fund still could

bear extra costs.

GG/rs:yr