STAND. COM. REP. NO. 675-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 1869
                                     H.D. 1




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committees on Labor and Public Employment and Finance,
to which was referred H.B. No. 1869 entitled: 

     "A BILL FOR AN ACT RELATING TO PUBLIC EMPLOYEE HEALTH
     BENEFITS,"

beg leave to report as follows:

     The purpose of this bill is to:

     (1)  Repeal the Hawaii Public Employees Health Fund (Health
          Fund) law;

     (2)  Mandate a dual fiduciary role for the new public
          employees health benefit board to enable it to achieve
          cost efficiencies for both public employers and public
          employees by granting the board flexible powers to
          terminate certain coverages under a benefit plan or
          plans; or

     (3)  Limit the contributions of the State and the counties,
          as public employees, for both active employees and
          retired employees, based on the amount of legislative
          appropriations made for the purpose of funding these
          contributions for benefit plan coverage.

     The Department of Budget and Finance and the Department of
Human Resources Development supported the intent of this bill.


 
 
 
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     The Board of Trustees of the Health Fund, the Office of
Information Practices, and the Office of Collective Bargaining
commented on this bill.

     The Hawaii Government Employees Association, the University
of Hawaii Professional Assembly, the United Public Workers, the
Hawaii State Teachers Association, the Hawaii Stated Teachers
Association-Retired, Oahu Retired Teachers Association, and
several individuals opposed this bill.

     Your Committees also considered H.B. No. 2461, which is the
State administration's proposal to create an employer-union trust
fund as a single public employees health benefit delivery system
to be administered by a board of trustees and held outside the
state treasury.

     Upon further consideration, your Committees have amended
this bill by deleting its entirety and inserting a modified
version of H.B. No. 2461.  As amended, this bill:

     (1)  Establishes the Hawaii Employer-Union Health Benefits
          Trust Fund (Trust Fund) to be placed under the
          Department of Budget and Finance for administrative
          purposes to provide public employees and their
          dependents with a health benefits plan, long-term care
          benefits plan, and group life insurance benefits;

     (2)  Establishes a Board of Trustees of the Trust Fund
          (Board of Trustees) composed of ten trustees to serve
          in an advisory capacity to the Trust Fund;

     (3)  Establishes a Board of Directors of the Trust Fund to
          be composed of three directors appointed by the Board
          of Trustees to administer and carry out the purposes of
          the Trust Fund;

     (4)  Compensates the Board of Directors of the Trust Fund
          (Board of Directors) with an annual base rate and
          provides for a bonus, depending upon the performance of
          the Trust Fund;

     (5)  Designates the Attorney General as the legal adviser to
          the Board of Trustees and Board of Directors; 

     (6)  Repeals the Health Fund, chapter 87, Hawaii Revised
          Statutes;

     (7)  Provides for the transfer of Health Fund staff,
          appropriations, and other assets to the Trust Fund;

 
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     (8)  Requires the Governor to appoint all members of the
          Board of Trustees by December 29, 2000, who would then
          be required to appoint the three members of the Board
          of Directors by July 1, 2001;

     (9)  Requires the Board of Directors to develop and issue
          rules, policies, and procedures, and contract for
          health benefits plans and group life insurance plans
          that will become effective on July 1, 2002;

    (10)  Authorizes the Health Fund to extend current health
          benefit and life insurance plan contracts through June
          30, 2002; and

    (11)  Appropriates an unspecified amount to hire necessary
          staff.

     As affirmed by the records of votes of the members of your
Committees on Labor and Public Employment and Finance that are
attached to this report, your Committees are in accord with the
intent and purpose of H.B. No. 1869, as amended herein, and
recommend that it pass Second Reading in the form attached hereto
as H.B. No. 1869, H.D. 1, and be placed on the calendar for Third
Reading.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Labor and Public
                                   Employment and Finance,

                                   
                                   
                                   
                                   
______________________________     ______________________________
DWIGHT Y. TAKAMINE, Chair          TERRY NUI YOSHINAGA, Chair