LEG REG REVIEW 2014, 3rd Issue February 10, 2014

LEG REG REVIEW is a periodic newsletter produced by PHILLIPS ASSOCIATES, a professional lobbying and consultant firm located near the State Capitol.  It contains news on the legislative and regulatory scene in Pennsylvania that may be of interest to the Insurance and Business Communities.  It is a free member benefit for those who are members of the Pennsylvania Association of Health Underwriters (PAHU).  Subscription information may be obtained by contacting PHILLIPS ASSOCIATES at 717/728-1217 FAX 717/232-7005 or e-mail to xenobun@aol.com.  Please email jtrout2792@aol.com supplying both your name and e-mail address if you wish to be removed from or added to this list.

BUDGET PRESENTED BY GOVERNOR FEBRUARY 4

Governor Corbett’s proposed State Budget for FY 2014-15 beginning July 1, 2014 spends $29.4 billion on state programs. Two areas receiving the lion’s share are Education (40.7%) and Health & Human Services including Public Welfare (40.1%).  Debt service (interest paid on PA’s obligations) is 3.8% of the entire Budget.  The $29.4 billion of state funds is supplemented by $24.2 billion of Federal Funds.  Add to that a variety of special funds and programs ($15.5 billion) and one is looking at total PA expenditures of $71.8 billion in the 2014-15 state operating budget.  Media uses the $29.4 billion figure since they are state expenditures, mostly out of the General Fund which is where Personal Income Tax, Corporate Net Income Taxes, Sales Taxes, etc. go.

Of interest to those in the Insurance Community are the PA Insurance Department budget, the Insurance Department program budgets, other budgets that it controls and several specified funds in other departments (DEP, L&I) that relate to insurance.  The Insurance Department has two budgets.  Its operating budget comes under the Insurance Regulation & Oversight Fund created by Act 46 of 2013 to create funding stability for the Department.  Into the Fund will go $25 million from licenses and fees and zero dollars from fines (NOTE: This is a change for FY 2013-14 when fines generated $3.278 million for this Fund.)  Disbursements for FY 2014-15 are estimated at $22.757 million with the remainder going into a roll-over cash balance.

In the General Fund, the Department budget for FY 2014-15 shows:

–          $19.9 million CHIP Management including Federal money

–          $116 million state CHIP money

–          $311.9 million Federal CHIP money

–          Federal money for High Risk Pool (PPACA) $3.1 million (NOTE: Claims paid to
some through March 31, 2014)

–          Federal money for Health Insurance Premium Review (PPACA) $1.4 million

–          Federal money for Consumer Assistance Program (PPACA) $1.1 million

Insurance Department Funds FY 2013-14             FY 2014-15                Change

Underground Storage Tank Indemnification Fund

USTIF Receipts                      $64.957 million           $65.557 million           -$600,000
USTIF Disbursements                        $83.843 million           $73.144 million           -$10.7 million

Cash on hand est. at $144.4 at start of FY 14-15 and $136.8 at FY end

Medical Care Availability & Reduction of Error Fund (MCARE)

MCARE Receipts                   $236.668 million         $236.728 million         +$60,000
MCARE Insurance Payouts   $211.9 million            $210.6 million             – 1.3 million

Cash balance at start of FY 14-15 est. $238.2 million and $264.2 million at FY end

 

Catastrophic Loss Benefits Continuation Fund (auto accidents between 10/1/84 and 12/31/89) is funded through 2088 through investment income (ticket surcharge now goes into General Fund).   

Patient Safety Trust Fund (independent review of medical facilities)
Cash balance at start FY 14-15 est. $5.9 million; $5.1 million at FY end

Special (non-Insurance Department) Funds

Fund                                       FY 2013-14                 FY 2014-15 est.          Change

State Workers Insurance Fund

SWIF  Receipts                      $306.3 million             $318.3 million             +12 million
SWIF Disbursements              $304.8 million             $329.3 million             +24.5 million

(NOTE: This includes payment of premium tax at $4.8 million in FY 13-14 and $5 million in FY 14-15.)

SWIF Cash Balance    est. at $1.509 billion at start of FY 14-15 and $1.498 billion at FY end

WC Administration Fund cash balance est. at start of FY 14-15 is $94 million and $94.4 at end.

WC Supersedeas Fund cash balance est. at start of FY 14-15 is $3.224 million and $1.76 at end.

WC Security Fund cash balance est. at start FY 14-15 is $704 million and $710.1 million at end.

Self Ins. Guaranty Fund (WC) starting out est. cash balance $56.65 million; $54.752 million at end.

Uninsured Employers (WC) Guaranty Fund starting est. cash balance $500,000; $1.265 million at end.

DEP Mine Subsidence Insurance Fund

DEP Receipts                          $6.5 million                 $6.7 million                 +$200,000
DEP Claims                            $5.9 million                 $6 million                    + $100,000

Cash Balance for Mine Subsidence Insurance is $94.7 million at FY start; $95.4 million at end

Staffing Budget

In addition to budget numbers are staff complements.  These are important because they show the capacity of agencies to carry out their mission.  Even if armed with a strong budget, an agency’s effectiveness might be crippled without enough staff to do the job.  This FY 2014-15 Budget increased authorized state personnel by a net 140 positions to 79,593 from the current fiscal year.  The authorized number does not equal actual employment which stands at 73,634, a reduction of 3,029 filled positions or four percent shrinkage in the filled positions.  Selected agency authorized levels:

Agency                                   Authorized FY 2012-13        Authorized FY 2014-15        Change

Insurance                                 273                                          273                                          0
Labor & Industry                    5,898                                       5,902                                       +4
Env. Protection                       2,729                                       2,663                                       – 66
Public Welfare                        16,722                                     17,039                                     +317
Aging                                      102                                          102                                          0
Agriculture                              592                                          592                                          0
Banking/Securities                  243                                          236                                          -7

POLITICS

  • TWO MORE RETIREMENTS: First elected to the PA House in 1978, Rep. Nick Micozzie (R-Delaware) announced that he is not seeking re-election to his southeast PA seat.  He was a long-time Insurance Committee chair and now heads the House Transportation Committee.  Retiring Senator Richard Kasunic (D-Fayette) marks the sixth Senate open seat in 2014.  He was elected in 1994.

REGULATORY UPDATE

Every year, each Cabinet agency is required to post proposed regulations in the PA Bulletin. This year, the Insurance Department only has two.  First are Rules and Procedural Requirements for Insurance Holding Company Systems to update our rule to conform with the NAIC Model Rule.  Second is a Rule regarding the Medical Catastrophic Loss Fund.  Contact for both is Peter Salvatore 717-787-4429.  Labor & Industry has nine proposed regulations, only one of which involves Workers’ Compensation. Details and contact persons for each proposed Rule are at https://www.pabulletin.com/secure/data/vol44/44-5/255.html

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