healthy texas

SB 6 by Senators Duncan and Nelson would establish "Healthy Texas," a new program to make health insurance affordable for small employers with low-wage workers. Healthy Texas would use a public reinsurance model like those in use in other states including New York. Texas Impact supports the use of public reinsurance and highlighted this approach in our 2008 report A New Diagnosis.

How It Works:

SB 6 (The Healthy Texas Act) would create the Small Employer Premium Stabilization Fund.  This fund would reimburse insurers for large insurance claims made by individuals who have group insurance under the Healthy Texas program.  Insurers would have to pay the first $5,000 of a claim, but could seek reimbursement for 80 percent of the cost of claims ranging from $5,000 to $75,000.

To qualify for the program, a business could not have offered group health insurance to employees in the last year.  Thirty percent of employees must be at or below 300 percent of the federal poverty level, and to join the program, 60 percent of employees must agree to purchase the insurance.  The bill is estimated by the Legislative Budget Board to cost $122.5 million over the next biennium.

A 2007 report issued by the Texas Department of Insurance (TDI) found that while 89 percent of large firms in Texas offer group health insurance, only 32 percent of small firms, those with fewer than 50 employees, offer health coverage to employees.  This can be attributed to the increasing costs of premiums, which according to the TDI report, have more than doubled in the last ten years.  Small business owners are less able or less willing to pay high premiums; according to a 2004 TDI survey, only 37 percent of these owners are willing to pay more than $100 a month per employee for health insurance.