According to the Legislative Budget Board (LBB), SB 636 is not expected to have a significant fiscal implication for the State of Texas. The bill mandates parity in mental health and substance use disorder (MH/SUD) coverage for certain government health plans, aligning these plans with federal standards. While implementing such parity could suggest potential increases in administrative or benefits costs, the LBB assumes any costs incurred could be absorbed within existing agency resources.

The fiscal note specifically references key state agencies affected by the bill, including the Teacher Retirement System (TRS), the Employees Retirement System (ERS), the Health and Human Services Commission (HHSC), and major university systems like Texas A&M and the University of Texas. Despite their role in managing large health benefit pools, none of these agencies anticipated that the bill would impose unfunded mandates or require additional appropriations to meet compliance standards.

Similarly, the bill is projected to have no fiscal impact on local governments. This is because the changes in law apply only to specific state-run or state-affiliated health benefit plans and do not alter funding obligations or service requirements for local units of government, such as cities, counties, or school districts operating independent plans.

In summary, SB 636 is structured to promote MH/SUD coverage parity in state health plans without triggering new costs that require legislative appropriations. The implementation is expected to be administratively manageable within current agency budgets and processes.

SB 636 proposes an expansion of Texas’s mental health parity requirements by applying them to additional public health benefit plans, including those administered by the Teacher Retirement System (TRS), the Employees Retirement System (ERS), and health plans for higher education and public school employees. While the intent is to ensure that mental health and substance use disorder (MH/SUD) treatment is covered comparably to physical health care in these government-run plans, the bill does so through a uniform, top-down regulatory mandate that raises significant concerns regarding the proper role of government, fiscal responsibility, and the preservation of health plan autonomy.

First, SB 636 grows the scope of government by inserting new statutory mandates into benefit designs that are currently managed by independent fiduciary boards. These public plans already have a duty to meet participant needs and manage costs within their funding structures. Mandating compliance with parity laws, originally developed for private-sector, commercial insurance, represents a clear expansion of the state’s regulatory footprint. Even though this bill applies only to public plans, it imposes binding legal standards on previously exempt or semi-autonomous government entities, reducing their flexibility and potentially inviting future legislative micromanagement.

Second, while the Legislative Budget Board’s fiscal note anticipates no significant immediate fiscal impact, the long-term fiscal implications remain uncertain and likely underappreciated. MH/SUD services, particularly when mandated for coverage parity, often lead to increased utilization. Over time, this can strain plan budgets and prompt either increased contributions from public employers (i.e., taxpayers) or higher costs for members. The absence of cost containment mechanisms, impact reporting requirements, or a sunset review provision heightens the risk of future unfunded liabilities. For lawmakers committed to fiscal discipline, this opens the door to unchecked growth in benefit costs without corresponding budgetary safeguards.

Third, the bill introduces a new layer of government-mandated benefit design, something that many conservatives philosophically oppose. Health care mandates, whether imposed on private insurers or public plans, erode market-based reforms by replacing organic plan-level decision-making with one-size-fits-all requirements. Though well-intentioned, this approach discourages innovation and detaches benefit design from actuarial analysis, participant preference, or budgetary constraints. Allowing TRS and ERS to maintain their discretion preserves flexibility and respects the governance structures already in place.

Finally, there is a significant concern about precedent. While this bill applies only to government plans, it mirrors federal parity rules and could be interpreted as a step toward broader parity mandates in the private market, particularly for ERISA-exempt self-funded plans. For lawmakers who have consistently opposed federal overreach into state-regulated health insurance or mandates on private businesses, this bill moves in the opposite direction. It signals legislative willingness to adopt expansive, federal-style benefit regulations and could fuel future efforts to push parity mandates more broadly across Texas’s health insurance landscape.

For these reasons, Texas Policy Research recommends that lawmakers vote NO on SB 636. SB 636 may be driven by a well-meaning desire to improve access to care, but it does so in a manner that enlarges government authority, risks long-term fiscal pressure, undermines market principles, and sets a precedent for future regulatory expansion. Lawmakers committed to limited government, fiscal prudence, and insurance market flexibility should oppose the bill in its current form.

• Individual Liberty: The bill promotes individual liberty by ensuring that mental health and substance use disorder (MH/SUD) treatment is treated on par with physical health conditions in major public employee health plans. In doing so, it enhances public employees’ freedom to access comprehensive health care without discrimination or artificial limitations. By removing outdated exclusions, the bill supports the principle that individuals should be free to pursue necessary medical care and improve their well-being without arbitrary barriers in government-provided health plans.
• Personal Responsibility: Ensuring equitable access to MH/SUD services supports personal responsibility by empowering individuals to seek help, manage their health, and remain productive members of society. Removing insurance-related barriers enables public employees and retirees to take initiative in addressing mental health needs without facing unequal treatment. This contributes to a more stable workforce, reduces the burden on emergency services, and encourages responsible engagement with preventive care.
• Free Enterprise: The bill imposes top-down, uniform requirements on state-managed health plans, which mimic the type of mandates often criticized in the private sector. While CSSB 636 does not apply directly to private businesses or insurers, it nonetheless reflects a mindset that shifts away from flexible, market-driven solutions toward centralized control over benefit design. It narrows the range of options fiduciary boards can use to structure health benefits, which may limit the ability to innovate or tailor coverage based on budget constraints or actuarial discretion. This limits the competitive dynamics even within government-plan administration.
• Private Property Rights: The bill has no direct effect on private property rights. It does not regulate private property, change land-use rules, or affect individual ownership rights. Its scope is limited to public-sector health insurance design and enforcement.
• Limited Government: This bill expands the role of government in a significant way. It subjects previously autonomous or exempt health benefit plans (TRS, ERS, and others) to a new layer of statutory compliance and oversight regarding parity rules. Although the fiscal note claims minimal cost, the bill nonetheless represents an expansion of state authority into areas traditionally managed by appointed boards and administrators. For proponents of limited government, this is a problematic precedent, one that shifts plan design authority from fiduciaries closer to the legislature and opens the door to future mandates on other plans or sectors.

• HB 1142 (Same As)
• HB 1396 (Similar To)