STAND. COM. REP. NO. 1551

                                   Honolulu, Hawaii
                                                     , 1999

                                   RE:  H.B. No. 1041
                                        H.D. 2
                                        S.D. 2




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Ways and Means, to which was referred H.B.
No. 1041, H.D. 2, S.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO THE PUBLIC EMPLOYEES HEALTH
     FUND,"

begs leave to report as follows:

     The purpose of this measure is to authorize the Board of
Trustees of the Hawaii Public Employees Health Fund (Fund) to use
rate credits and reimbursements to:

     (1)  Improve plan benefits;

     (2)  Reimburse employee-beneficiaries; or

     (3)  Reduce employee-beneficiaries' monthly contributions.

     Your Committee finds that the Fund is currently holding
approximately $17 million in state and county employee
contributions which it cannot expend due to the lack of statutory
authority.

     Your Committee has amended the measure by deleting its
substance and inserting therefor, provisions that:

     (1)  Establish a two year employer-union trust pilot
          project; and


 
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                                   STAND. COM. REP. NO. 1551
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     (2)  Allow for the porting of Medicare Part B reimbursements
          to employee organization health benefits plans.

     Your Committee has also amended the effective date from upon
approval to July 1, 2500, to facilitate further discussion.

     Your Committee is keenly aware that the large number of
"baby boomers" are approaching retirement, the increasing cost of
health care, and the retirees' increased life expectancy
threatens the future financial stability of the current "pay-as-
you-go" funding method of the Fund.  Based on these findings,
your Committee believes that the time has come to explore
alternatives that may effectuate significant change in the
provision of health care benefits for employees, retirees, and
beneficiaries.

     While the pilot project is ongoing, your Committee is
committed to making the health benefits plan of the Fund more
competitive with other health benefits plans.  To accomplish
this, the porting of Medicare Part B reimbursements is crucial to
evening out the actuarial experience of the Fund's pool of
beneficiaries.  By authorizing the porting of Medicare Part B
reimbursements to employee organizations' health benefits plans,
retirees have more of an incentive to switch to employee
organization health benefits plans.

     As affirmed by the record of votes of the members of your
Committee on Ways and Means that is attached to this report, your
Committee is in accord with the intent and purpose of H.B.
No. 1041, H.D. 2, S.D. 1, as amended herein, and recommends that
it pass Third Reading in the form attached hereto as H.B.
No. 1041, H.D. 2, S.D. 2.

                                 Respectfully submitted on behalf
                                 of the members of the Committee
                                 on Ways and Means,



                                 ________________________________
                                 CAROL FUKUNAGA, Co-Chair



                                 ________________________________
                                 ANDREW LEVIN, Co-Chair

 
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