STAND. COM. REP. NO. 1465-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: S.B. No. 3193
                                     S.D. 1
                                     H.D. 2




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 S.B. No. 3193, S.D. 1, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO THE HAWAII INSURANCE
     EXCHANGE,"

beg leave to report as follows:

     The purpose of this bill is to provide for improved, cost-
effective administration of current and future public employee
benefit obligations, by transferring administration of these
obligations from the Hawaii Public Employees Health Fund, to a
newly established captive insurance company to be known as the
Hawaii Insurance Exchange.

     Your Committees find that adequate financing of the current
and potential employee benefit obligations for existing and
future state and county employees is of critical importance.  A
captive insurance facility may be an effective funding or
financing mechanism for a single employer-union health trust fund
and may result in cost savings to the State.  However, your
Committees believe that the captive insurance facility should not
serve as an alternative to the employer-union health trust fund,
but rather as a possible financing mechanism for the employer-
union health trust fund.

     The Department of Commerce and Consumer Affairs, the
Department of Budget and Finance, and the Hawaii State Teachers

 
 
 
                                 STAND. COM. REP. NO. 1465-00
                                 Page 2

 
Association submitted comments.  The United Public Workers
opposed the bill.

     Your Committees have amended this bill by deleting its
substance and inserting provisions requiring, upon the passage of
Senate Bill No. 2802 or House Bill No. 1869, in any form, that
the Department of Accounting and General Services perform a
feasibility study on the concept of using a captive insurance
facility as a funding mechanism by a single employer-union health
trust fund to fund or finance current and future public employee
health benefit obligations of the State and the counties.  

     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 S.B. No. 3193, S.D. 1, H.D. 1, as amended
herein, and recommend that it pass Third Reading in the form
attached hereto as S.B. No. 3193, S.D. 1, H.D. 2.

                                   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