BILL ANALYSIS                                                                                                                                                                                                    




          Appropriations Committee Fiscal Summary

 ------------------------------------------------------------ 
|                               |AB 78  (Gallegos)           |
|-------------------------------+----------------------------|
|                               |                            |
|-------------------------------+----------------------------|
|Hearing Date: 8/25/99          |Amended: 8/16/99            |
|-------------------------------+----------------------------|
|Consultant: Kathleen Chavira   |Policy Vote: Insurance 8-2  |
|                               |                            |
|                               |                            |
 ------------------------------------------------------------ 

BILL SUMMARY: 

 Establishes the Department of Managed Health Care  
  (DMHC)by March 1, 2000 to administer and enforce  
  regulation of health care services plans after July 1,  
  2000.  
 Declares the Legislature's intention that a study be  
  conducted to evaluate the feasibility of  transferring  
  personnel and funds dedicated to the regulation of  
  disability insurers from the Department of Insurance to  
  the new department by July 1, 2002.   
 Creates a 20 member Advisory Committee on Managed Care to  
  be appointed by the Commissioner.  
 Requires report by 5-1-2000, to Governor and Legislature,  
  making recommendation on expansion of jurisdiction to  
  include medical groups and IPAs and other provider  
  groups. 
 Appropriates $3 million from the State Corporations Fund   
  to the department to cover start-up, operating, and  
  personnel expenses and allows the new department to levy   
  fees on health plans to cover costs. 

                         Fiscal Impact (in thousands)
  
Major Provisions    1999-2000     2000-01      2001-02      Fund  

Program Shift*
  Dept. of Corp                   -5,314                 -15,943+        
-15,943                     Corp
  DMHC                  5,314                  15,943         15,943   Corp
Start-up Costs
  DMHC             3,000**                         Corp










*Program fees to cover costs also are shifted.
**Appropriated in this bill   

STAFF COMMENTS: 
 
This bill may meet the criteria to be placed on the  
Suspense File.  While the bill contains language  
authorizing an assessment to pay for start up cost, this  
language is permissive.  The Corporations Fund estimated  
reserve for economic uncertainties is $21.4 million.  This  
reserve has been drawn down as expenditures each year  
exceed expenditures.

The Senate Insurance committee noted the need for technical  
amendments which make the language regarding the feasiblity  
study for transfer to DOI consistent throughout the bill.