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

SPONSOR Beffort

ORIGINAL DATE

LAST UPDATED

02/15/07

HB

SHORT TITLE Child Care Worker Insurance Premiums

SB 870

ANALYST Weber

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

$1,000.0

Recurring

General

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY07

FY08

FY09

$2,400.0

$2,350.0 Recurring

Federal

Medicaid

(Parenthesis ( ) Indicate Revenue Decreases)

ESTIMATED ADDITIONAL OPERATING BUDGET IMPACT (dollars in thousands)

FY07

FY08

FY09 3 Year

Total Cost

Recurring

or Non-Rec

Fund

Affected

Total

$108.0 $120.0

$228.0 Recurring General

$134.0 $140.0

$274.0 Recurring Federal

Medicaid

(Parenthesis ( ) Indicate Expenditure Decreases)

SOURCES OF INFORMATION

LFC Files

Responses Received From

Human Services Department

Children Youth and Families

Public Education Department

Senate Bill 870 – Page

2

SUMMARY

Synopsis of Bill

Senate Bill 870 appropriates $1 million from the general fund to the Human Services Department

to pay the employee portion of a health premium for a child care worker eligible for coverage

available through a Medicaid health insurance flexibility and accountability waiver when the

coverage is offered by the following two types of providers: 1) an eligible child care provider

under the Pre-Kindergarten Act; or 2) a provider that accepts children enrolled in health or

human service programs under Chapter 27 NMSA 1978 (Public Assistance Act).

FISCAL IMPLICATIONS

The appropriation of $1 million contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of Fiscal Year 2008 shall revert

to the general fund.

SIGNIFICANT ISSUES

HSD provides the following background on the waiver known as State Coverage Insurance that

would provide the health insurance coverage.

The HIFA waiver, known as State Coverage Insurance (SCI), is designed to offer health care

coverage to low-income working adults primarily through an employer-based system. SCI is

available to uninsured, low-income adults, ages 19 through 64, with countable family incomes of

up to 200% of federal poverty level ($1,634.00 for a single person or $2,767.00 per month for a

family of three) and who are not eligible for certain government health insurance benefits, such

as Medicaid (Title XIX), Medicare, private health insurance, CHAMPUS, and other public or

private health insurance programs. There are no preexisting condition limitations.

This is a program based on a public/private partnership, with the employer and employee paying

about a third of the premium and state and federal funds paying the remainder. Employees or

individual enrollees cannot have voluntarily dropped health insurance in the past six months, and

employers cannot have voluntarily dropped health insurance for their employees in the last

twelve months. The primary goal of SCI as stated in the Health Insurance Flexibility and

Affordability (HIFA) waiver is to encourage employers to provide employer sponsored health

plans and assist employees in enrolling in health plans that the employer offers.

The current employee share, the portion covered by this legislation, is $0, $20 or $35 per month,

depending on the employee’s income, after income disregards are subtracted from their gross

income. The most an employee would pay annually would be $420. If all employees paid this

rate, approximately 2,381 persons could obtain full-year coverage.

It should be noted that HSD

does not have data regarding the potential number of eligible persons or their enrollment rate to

determine if the appropriation is adequate to cover all possible enrollees.

CYFD adds the bill refers to providers that are eligible pursuant to the Pre-Kindergarten Act,

which defines an eligible provider as being “licensed by the children, youth and families

department that provides early childhood developmental readiness services or preschool special

education, or is a public school, tribal program or head start program." (32A-23-3 NMSA 1978)

Senate Bill 870 – Page

3

This definition includes licensed childcare centers and licensed homes. Based on data from the

New Mexico Department of Labor, there were approximately 8,000 individuals working in

licensed childcare programs in 2004. With an average wage of $7.20 per hour, a significant

number of these workers likely would be eligible for the health insurance coverage referenced in

this bill.

PED notes for their employees that all PreK programs funded through the PED are in school

districts and are required to employ licensed instructors and educational assistants in the

classroom. All PED PreK program staff are half or full time (20-40 hrs per week) employees of

their district and are eligible to receive health insurance as provided by the NM Public School

Insurance Authority if they so choose. Very few, if any, of the PED PreK program staff

employed in a school district would meet the eligibility criteria for the Medicaid health insurance

flexibility and accountability waiver.

OTHER SUBSTANTIVE ISSUES

HSD cautions that the identification of a particular population subset as the recipient of the

benefit and having the state rather than the employee contribute a portion of the private share is

not consistent with the intent of the waiver and could necessitate federal approval. This bill is

inconsistent with the intention of the federal HIFA waiver. The primary goal of SCI as stated in

the Health Insurance Flexibility and Affordability (HIFA) waiver is to encourage employers to

provide employer sponsored health plans and assist employees in enrolling in health plans

offered by the employer. Provision of funding to a particular population group could potentially

be construed as discriminatory.

MW/mt