STAND. COM. REP. NO. 463-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 2919
                                     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 Economic
Development and Business Concerns, to which was referred H.B. No.
2919 entitled: 

     "A BILL FOR AN ACT RELATING TO HEALTH CARE COVERAGE,"

beg leave to report as follows:

     The purpose of this bill is to redistribute the cost of
health care coverage between an employer and employee by
eliminating the requirement that an employee contribute no more
than 1.5 percent of the employee's wages for health care
coverage.

     Testimony in support of this bill was submitted by the
Legislative Information Services of Hawaii, the Hawaii Business
League, and the National Federation of Independent Business
Hawaii.  Testimony in opposition was submitted by the Department
of Labor and Industrial Relations and the ILWU.

     Your Committees find that when the Hawaii Prepaid Health
Care Act (Health Care Act) was adopted, the cost of premiums for
individual coverage was less than it is today.  Therefore, if an
employer withheld 1.5 percent of an employee's wages for the
employee's half of the health care coverage, the premium costs
would be split 50/50 between the employer and the employee.  As a
result of the increase in premium costs, the withholding of 1.5
percent of an employee's wages does not cover one-half of the
premium costs.

 
 
                                 STAND. COM. REP. NO. 463-00
                                 Page 2

 
     Your Committees heard several testifiers raise concerns
regarding the possible applicability of the Federal Employee
Retirement Income Security Act (ERISA) to this bill.  ERISA
prohibits states from making substantive amendments to their
Health Care Acts.  However, Congress granted Hawaii a waiver to
this requirement, so long as there are no substantive changes to
the Hawaii Health Care Act.  Your Committees find that replacing
the liability for payment of premiums pursuant to this measure
may be considered a substantive change, and may require
Congressional approval.

     Your Committees have amended this bill by changing the
effective date of this bill to sixty days after Congressional
approval.

     As affirmed by the record of votes of the members of your
Committees on Labor and Public Employment and Economic
Development and Business Concerns that are attached to this
report, your Committees are in accord with the intent and purpose
of H.B. No. 2919, as amended herein, and recommend that it pass
Second Reading in the form attached hereto as H.B. No. 2919, H.D.
1, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Labor and Public
                                   Employment and Economic
                                   Development and Business
                                   Concerns,

                                   
                                   
                                   
                                   
______________________________     ______________________________
ROBERT N. HERKES, Chair            TERRY NUI YOSHINAGA, Chair