Press Release June 2, 1999	Contact: Reggie James or Rafael Ayuso ayusra@consumer.org (512) 477-4431 Consumers Union Southwest Regional Office

76th Legislature Wrap-up:

AUSTIN-Consumer gains during the 76th Legislature slightly edged out losses in the short run, exceeding expectations on a number of issues near and dear to the hearts and wallets of average Texans, Consumers Union said today in releasing its consumer scorecard for the session.

"Considering the little guy so often is an afterthought when the Legislature meets, consumers did better than expected," said Reggie James, director of Consumers Union's Southwest Regional Office. "Unfortunately, several of the more complex issues of the session may come back to haunt moderate and low-income consumers in years to come."

James cited two utility matters as examples: The electric utility deregulation bill, although significantly improved from earlier attempts, will impose long-term costs on residential consumers who will pay for most of the utilities stranded costs. In telecommunications, residential consumers should expect to see increased rates for non-basic services that will be used to fund the development of competitive high-end services, especially for businesses.

Overall, consumers fared well on health care matters, with uninsured children emerging as the big winners and HMO customers also gaining ground, with a new law to help them navigate the HMO maze. And the Legislature scored a big win in bringing a lot more sunshine to government in Texas with the passage of a strong law that will make government records more accessible to every Texan.

The financial services front yielded mixed results. On the one hand, small consumer loans became more expensive to obtain and credit card holders will pay a little extra for their borrowing privileges. On the other, bills to authorize usurious loans - called "payday loans" - did not pass; the state's home equity market became more consumer friendly; and consumers held ground on the insurance front.

Following are highlights of key consumer issues addressed by the 76th Legislature:

Consumers Union, publisher of Consumer Reports, is an independent, nonprofit testing and information organization serving only the consumer. We are a comprehensive source of unbiased advice about products and services, personal finance, health nutrition, and other consumer concerns. Since 1936, our mission has been to test products, inform the public, and protect consumers.

HEALTH CARE & HEALTH INSURANCE

*CHIP
Working families can now get affordable, comprehensive health care coverage for their kids.

SB 445 (Moncrief/Gray) One of the most significant victories of the session for Texans, considering that 10% of U.S. uninsured kids live in Texas (1.4 million uninsured children). Funded by proceeds from the tobacco settlement, working families earning less that two times the poverty level ($33,400 for a family of 4) will be able to get health care coverage for their children ages 0-19 through the Children's Health Insurance Program. The federal government will match every 26 cents of state funds put into this program with 74 cents of federal funds. Gov. Bush signed the bill, which requires the Health and Human Services Commissioner to implement the program by September 1, 2000.

*Health Care Ombudsman
New law recognizes need to help consumers navigate our complex health insurance system.

HB 3021 (Amendment by Naishtat based on his HB2418). Texas HMO consumers will now have someone to look out for their interests and help make their health insurance work for them as a result of a new consumer assistance program for HMOs authorized by the Legislature. Under the bill, the Texas Department of Insurance may contract with a nonprofit organization to run the program. It will assist consumers with HMO complaints or appeals and other appeals outside of HMOs, as well as with Medicaid and Medicare hearings. It will make referrals to other programs or agencies whenever appropriate and will operate a statewide clearinghouse for health care information.

*Prescription Drugs
Consumers get continued coverage for prescription drugs that are dropped from HMO list.

SB 1030 (Madla/Farabee). This bill will help HMO consumers by requiring health plans to disclose which drugs are in the plan's "formulary" (the list of drugs that the HMO will cover) and to continue covering a person's prescription for the remainder of their contract year when the drug has been removed from the plan's formulary list. It also clarifies that enrollees denied coverage for a particular drug can appeal the decision using the Texas independent review law.

*Doctor Choice
New regulations established for physician groups accepting insurance risks, but enrollees' access to doctors in their HMO network continues to be restricted.

SB 890 (Harris). Currently, the availability of many network doctors is restricted to some HMO enrollees. Physician-run independent practice associations - also called limited provider networks and now regulated as "delegated networks" in this bill - essentially operate like mini HMOs within an HMO. When a person joins an HMO and selects a primary care doctor who is a member of a delegated network, the person no longer has access to the full HMO network. Consumer, physician, and HMO representatives have requested an interim study on unresolved issues such as access to physicians and financial standards for these networks. The new law sunsets in two years.

*Information about Physicians
Law creates new resource for consumers wanting more information about licensed physicians.

HB 110 (Maxey). Texas consumers will be better able to shop for doctors with this physician quality disclosure bill. The bill creates a profile of doctors, placing information about licensed doctors on the Internet, including disciplinary actions and medical malpractice lawsuits. It will be helpful to consumers in the process of picking a primary care doctor within an HMO and for those seeking information on specialists.

*Medicaid Managed Care
Has Medicaid managed care saved money and improved access to care? "Pilot" program would be fully evaluated under this bill. Also, low income pregnant women would get quicker access to prenatal care.

HB 2896 (Coleman). Numerous problems have plagued Texas' Medicaid managed care pilot program since its inception. This measure requires an evaluation of the Medicaid managed care pilot and places a moratorium on more managed care pilots until after the review is done. Also requires expedited enrollment for pregnant women (so they get prenatal care faster) and newborns and reduces interruptions in Medicaid due to red tape.

CONSUMER FINANCE

*Home equity law improvements
Home equity loans will now be available to consumers with homes on lots larger than one acre and to older Texans wanting to benefit from reverse mortgages.

SJR 12 (Carona/dealing with reverse mortgages) and SJR 22 (Harris/pertaining to 1-acre lots). The Legislature addressed two problems in the home equity market that affected consumers' ability to get loans, but rejected requests from the industry to give broad interpretative authority to the Texas Finance Commission.

A problem in the original home equity legislation kept those with homes on lots larger than one acre from getting home equity loans. A separate problem prevented "reverse mortgages" - targeted to older Texans - from being made. The Legislature addressed these problems in a constitutional proposition that will be before the voters in November. Some lenders, frustrated by limits on fees that can be charged on home equity loans and other consumer protection provisions, attempted to transfer the authority to interpret the home equity constitutional provisions from the courts to the Finance Commission, an appointed body that oversees banks and other lenders. The Legislature rejected this proposal.

*Consumer loans ("Nickel-and-dime")
New higher fees are in store for consumers making small consumer loans unless Governor Bush vetoes this legislation.

HB 2338 (Ehrhardt/Carona) - Consumers Union is asking Gov. George W. Bush to veto this bill, which would double the add-on fee for consumer loans under $1,000 -- from $10 to $20. The Legislature passed the $10 fee in 1997, along with a $25 fee for loans above $1,000.

*Payday loans
Recent growth in usurious loans may be coming to an end. Bad legislation failed to pass and the Attorney General is showing signs of aggressively enforcing the law.

The Legislature soundly rejected attempts by lenders to legalize very high cost loans in Texas and work by the Consumer Credit Commissioner and Attorney General resulted in lawsuits against "payday" loan lenders.

Good press coverage on this issue helped contain one set of bad bills which would have legalized payday loans by creating a new type of high-cost loan in Texas secured by a personal check. The legislation would have authorized interest rates of several hundred percent. Another set of bills that also didn't pass would have clarified that payday loans fall under the state usury laws, effectively banning them. On May 12, the Attorney General of Texas filed major lawsuits against payday lenders that may achieve the same goal.

TELEPHONES

*Competition-Deregulation
The bottom line: competition won't increase for residential consumers in Texas and many customers will end up with higher bills. A loss for consumers.

SB 560 (Sibley/Van de Putte) -- Southwestern Bell once again showed its enormous political and financial clout and why it has some 100 lobbyists parked in the hallways of the Capitol. While freezing basic residential rates for six years (through 2005) consumers will end up paying more for caller ID, late fees and other special services and have no guarantee of lower intrastate long distance rates due to lower access charges. The bill came out of the conference committee providing protection for development of competitive choices for business customers only.

*Pre-paid calling cards
Texans who use prepaid calling cards will have better information at hand to evaluate their services.

SB 1020 (Shapleigh) The bill gives the Public Utility Commission the authority to require rate and term disclosures for prepaid calling cards through the issuing of rules. Currently, when selecting a card consumers often lack a way to determine the per-minute rate, the minimum rate, or call fees associated with these cards.

*Customer Protection
Electric and phone customers often victimized by practices such as "cramming" and "slamming" will be better protected against these abuses.

SB 86 (Nelson) This legislation gives the Public Utility Commission authority to protect electric and telecommunications customers without repeatedly having to seek new authorization from the Legislature each session to end the latest consumer rip-off. Changes in technology and market structure have increased the need for minimum standards of service quality, customer service and fair business. Modern scams such as slamming and cramming necessitate that the Public Utility Commission have authority to make and enforce necessary rules necessary to protect consumers.

ELECTRIC

Consumers would have been better off without this bill and would have paid lower prices over the next several years. But the bill is a significant improvement over other deregulation proposals earlier on the table.

SB 7 (Sibley/Wolens) - A landmark bill based on an unproven theory improved significantly for Texas consumers when the bill was substituted in the House State Affairs Committee by its Chairman, Rep. Wolens. The bill now includes many of the provisions CU has called for, including a more fair allocation of stranded cost charges between large business and residential customers (the Bailey amendment), incentives for new competitors to serve residential customers, assistance to low-income customers, longer term price caps for residential customers, and provisions to clean up the air.

Serious concerns remain about whether consumers will benefit in the long run from electric industry restructuring. Texas consumers have not demanded electric deregulation. Yet, they will be required to pay billions of dollars in stranded costs and be asked to take a leap of faith that deregulation will result in lower prices. The fact is SB 7 is still overly generous to utilities on stranded costs, and the market power protections are insufficient. Nevertheless, the political reality is that the Legislature decided to pass an electric deregulation bill and that the bill improved substantially for residential consumers.

OPEN GOVERNMENT

Consumers generally will have more access to records held by government entities, such as school boards and city governments and to meetings by government bodies.

SB 1851 (Wentworth). Overall, SB 1851 is a victory for citizens seeking information from government. But this revision to the Open Records Act is also a compromise in that it increases fees for citizens and closes access to certain records. The bill:

· accelerates the attorney general's open records decision process if officials claim that information is confidential and not subject to release under the Act.
· eliminates the "reconsideration" process where officials who disagreed with an attorney general opinion returned it and asked for a new opinion on the same request, and instead mandates that officials provide information when the AG says it is public or file for an injunction within 30 days of the opinion.
· ensures that certain information-including reports, policy statements or interpretations issued by agencies-will be released to the public upon request.
· narrows key exceptions frequently used by officials to delay release of public information, including the trade secret exception and the litigation exception.
· creates an itemized estimate of any charges, and if final charges will be more than 20% higher than the estimate, a new bill must be provided itemizing the final charges.
· requires governmental bodies to post, in a visible location, a summary of citizen rights under the Public Information Act.
· encourages enforcement by local county and district attorneys as well as the attorney general.

HB 156 (Wolens). This bill closes a loophole that allows government decision makers to meet out of public view.

INSURANCE

*Deregulation of insurance
Consumers should see no significant changes in this area.

The Legislature rejected insurance industry efforts to deregulate auto and home insurance, but also failed to rein in high cost county mutuals or give TDI rate supervision over unregulated Lloyds insurers. Insurance companies promised savings for consumers, but these promises flew in the face of the facts - several years of multi-billion overcharges by auto insurers have yet to be passed on to Texas consumers.

HB 1637 (Dutton) and SB 600 (Wentworth) - an industry-supported bill that would have deregulated auto insurance rates and rate "classifications," the standards insurance companies use to divide up consumers into smaller and smaller groups. Neither bill made it out of committee.

HB 3017 (Smithee) - another industry bill to deregulate auto and homeowners policies, rates and the way companies determine categories of policyholders. The bill failed to garner a majority of votes in House Insurance Committee.

*Cancellations and denials
Consumers will now be able to get written explanation about why their insurance coverage may have been denied, cancelled or non-renewed.

SB 984 (Madla) This bill will provide consumers valuable information to help them correct problems, to the extent possible, so they can get the insurance they need. For example, if a company denies homeowners insurance because a person uses space heaters, the consumer could then look for a another company that does not do this or can replace the space heaters.

*Credit history in underwriting
Like last session, the insurance industry killed legislation that would have banned the use of credit history in the sale of insurance.

HB 107 (Alvarado) -The bill prohibitted insurance underwriting decisions based on credit reports (which have nothing to do with pre-paid insurance premiums). It made it out of the House Insurance Committee but died quietly in Calendars.

*Rental car waivers
Consumers retain protections which the rental car industry tried to eliminate.

HB 3091 (Siebert) The rental car industry tried to eliminate consumer protections in the law. Intervention by CU kept this from happening.

In recent years, many states have adopted a model law regulating the sale of loss damage waivers to private passenger automobile renters. This bill adopts the model law. Although similar to the existing statute, the bill as originally proposed eliminated several key protections that exist under current law. Unlike other states, for Texans with auto insurance these waivers are duplicative of coverage they already have under the liability portion of their policy. Consumers Union successfully worked to restore disclosure requirements for Texas residents to notify them of this and to prohibit high-pressure sales tactics sometimes associated with the sale of the waivers.

ENVIRONMENTAL HEALTH - FOOD SAFETY

*Contested Cases
Texans averted a potential major setback in their ability to participate in environmental proceedings and even made some slight gains.

HB 801 (Uher) -- The bill originally limited public participation in pollution permit proceedings at the Texas Natural Resource Conservation Commission (TNRCC), but the anti-public participation provisions were removed from the bill in conference committee. What remains is on balance good for the public and good for the industry and should reduce the time and expense of environmental proceedings at TNRCC for both sides. Unfortunately, other bills that passed will affect the public's right to participate in some areas of the law.

*Pesticide Use Reporting
Once again, Texas will lack a mechanism to monitor the use of pesticides in the state.

HB 1378 (Naishtat) -The bill calling for a study on the feasibility of a statewide pesticide use reporting database died in the House Natural Resources Committee due to opposition from the Texas Farm Bureau. Several states currently require pesticide use reporting. This data enables regulators and farmers to make decisions based upon science rather than politics and speculation. CU and others will continue to work to garner public and industry support for a more rational pesticide regulatory program that is based on the best information available.

*"Veggie libel" law
Public safety and free speech fall victims to the Legislature's inability to pass a bill to repeal the Texas "veggie libel" law.

HB 126 (McClendon) - Failure of bill represents a defeat for free speech, health and safety and the public's right to know. The "veggie libel" law currently affects debate on food safety issues. This law isn't about compensating people for actual harm, it is about using a bad law to threaten good intentioned people from freely discussing important issues. It is especially harmful to small publishers who can't afford to defend themselves against frivolous cases.

*Oysters
Texans will be left exposed to getting sick from eating raw oysters again during the warm summer months while the Texas Department of Health is limited in its ability to respond.

SB 1685 (Bernsen; bad amendment by Zbranek). As finally passed, the bill limits the ability of the Texas Department of Health (TDH) to respond adequately to illness related to the Vibrio parahaemolyticus. It reduces protections for public health in an effort to keep oyster harvest areas open. TDH Commissioner William Archer has said the proposed standards "could jeopardize public health as well as the long term viability of the Texas Oyster industry." CU is urging Gov. Bush to veto the bill.

MANUFACTURED HOMES - TENANTS RIGHTS

Manufactured home owners who rent their lots will continue to be treated as second-class citizens.

HB 2015 (Dukes, et al.) and SB 125 (Lucio) - The failure of these bills is bad news for one-third of all Texas families who are now buying manufactured homes. The bills would have granted manufactured home owners who rent their lots basic tenant rights, including renewable written leases and rights governing their relationship to landlords. They were opposed by the industry group Texas Manufactured Housing Association. The House bill died in Calendars and the Senate bill never made it out of committee.

FUNERAL HOMES

Funeral industry regulation came under scrutiny this session, but the benefits for consumers will depend on the Governor's upcoming appointments and sunset review of the agency.

HB 3516 (Marchant/sponsored by Carona) - A good bill that strengthens public membership on the governing board of the beleaguered Texas Funeral Service Commission. The board will now have six members, two of which will be industry representatives and the four others will be public representatives. The bill also eased requirements for each funeral establishment to have a costly embalming facility, though an attempt to lower cost further was rejected. SB 440 (Moncrief) puts the agency under sunset review immediately.