STAND. COM. REP. NO. 2750

                                   Honolulu, Hawaii
                                                     , 2000

                                   RE:  S.B. No. 2326
                                        S.D. 1




Honorable Norman Mizuguchi
President of the Senate
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committees on Commerce and Consumer Protection and Ways
and Means, to which was referred S.B. No. 2326 entitled: 

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

beg leave to report as follows:

     The purpose of this measure is to require the Employees'
Retirement System (ERS) to pay for retirant health benefits if
fully funded and if the reimbursement will not reduce the ERS'
earnings below the investment yield rate for the fiscal year in
which the reimbursement is sought.

     Testimony in support of the measure was received from the
United Public Workers, the Hawaii State Teachers Association, and
the Hawaii State Teachers Association Retired.  The Public
Employees Health Fund took no position.  The Department of Budget
and Finance and the Employees' Retirement System opposed the
measure.

     Although your Committees believe the contents of the measure
as received by your Committees have merit, your Committees agree
that the issue of requiring the ERS to pay for retirant health
benefits requires more discussion and will address this issue at
a later time.  However, your Committees also recognize the
importance of having legislative vehicles moving through the
legislative process to foster more discussion on public sector
health benefits matters.  As such, your Committees have amended
the measure by deleting its substance and inserting therefor,

 
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                                   STAND. COM. REP. NO. 2750
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provisions which allow for the porting of Medicare Part B
reimbursements to employee organizations.

     Your Committees have amended the measure to provide the
Public Employees Health Fund with the flexibility it needs to
port Medicare Part B reimbursements to an employee organization
that provides health benefits to retirant-beneficiaries who have
chosen to subscribe to the employee organization's health plan
instead of the Public Employees Health Fund's plan.  Your
Committees have also inserted a defective effective date to
ensure the measure's continued discussion in the legislative
process.

     Your Committees realize that other measures such as S.B.
No. 2802, which establishes an Employer-Union Health Benefits
Trust, and S.B. No. 3193, which establishes a Hawaii Insurance
Exchange, are being recommended by your Committees to pass out of
the Senate.  These two measures establish two distinctly
different types of health benefits administration for public
sector employees and retirants and call for the abolishment of
the Public Employees Health Fund.  However, your Committees are
aware that if neither one of these two concepts are adopted by
the Legislature, changes to the Public Employees Health Fund must
still be made.  It is your Committees' intent that this measure
serve as the vehicle for improvements to the Public Employees
Health Fund.

     As affirmed by the records of votes of the members of your
Committees on Commerce and Consumer Protection and Ways and Means
that are attached to this report, your Committees are in accord
with the intent and purpose of S.B. No. 2326, as amended herein,
and recommend that it pass Second Reading in the form attached
hereto as S.B. No. 2326, S.D. 1, and be placed on the calendar
for Third Reading.


 
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                                   STAND. COM. REP. NO. 2750
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                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committees on Commerce and
                                   Consumer Protection and Ways
                                   and Means,



____________________________       ______________________________
CAROL FUKUNAGA, Co-Chair           BRIAN KANNO, Co-Chair



____________________________       ______________________________
ANDREW LEVIN, Co-Chair             BRIAN T. TANIGUCHI, Co-Chair

 
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