Report Title:

Committee to Study Employer-Union Trust

RESOLUTION

WHEREAS, the Public Employees Health Fund provides health and life insurance benefits to state and county public employees and their dependents, retirees, and reciprocal beneficiaries; and

WHEREAS, eligible employees and retirees can enroll in a health benefit plan sponsored by a public employee organization or union as an alternative to plans provided by the Health Fund; and

WHEREAS, the State and the counties, as employers, and public employees share in the cost of the health benefits through the payment of required monthly contributions to the Public Employees Health Fund; and

WHEREAS, Act 309, Session Laws of Hawaii 1996, stated that: ". . . the present governance structure to determine and fund health benefits for public employees and retirees is not only cumbersome and inflexible, but does not foster cost-efficiency. Benefits are statutorily established and administered by an independent board of trustees within a fixed statutory framework. At the same time, public employer contributions for these health benefits are negotiated separately through collective bargaining agreements with public employee organizations. Consequently, there is little connection between benefit levels and costs, and limited latitude to design benefit packages that minimize costs and better meet the health care needs of employees"; and

WHEREAS, Act 309 further stated that ". . . public employers and public employee organizations should be involved in determining health care coverage and costs because health benefits have not only become a significant component of the total compensation package for public employees, but represent a significant cost to public employers. The employer-union trust concept for determining and administering health benefits provides a mechanism for linking benefit levels and costs, as well as the necessary flexibility to establish appropriate health benefits coverage"; and

WHEREAS, Act 309 required the Director of Finance to establish a committee comprised of representatives from state and county public employers and public employee organizations to develop and recommend a proposal to implement an employer-union trust concept for determining and administering public employee and retiree health benefits; the proposal was to include a suggested trust structure and necessary statutory changes to chapters 87 and 89, Hawaii Revised Statutes; and

WHEREAS, although Act 309 required the Director of Finance to report to the Legislature prior to the convening of the 1997 Regular Session, to date, no report has been submitted; and

WHEREAS, a 1999 Auditor's report, Actuarial Study and Operational Audit of the Hawaii Public Employees Health Fund, recommended combining the Health Fund program and all union programs into one overall health benefit program, noting that Oregon and Pennsylvania used an employer-union trust governance structure to provide a single health benefit program for public employees; and

WHEREAS, as a 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; and

WHEREAS, based on these findings, the time has come to effectuate significant change in the provision of health care benefits for its employees, retirees, and beneficiaries; and

WHEREAS, in 2000, the Board of Trustees for the Public Employees Health Fund requested the Attorney General to review a 1979 Attorney General opinion relating to the Board's responsibility for premium payments made by public employee unions with funds received from the Health Fund for union medical plans, but there has been no subsequent Attorney General opinion issued that modifies or supersedes the 1979 opinion; and

WHEREAS, because the report from the committee established by Act 309 to develop and implement the employer-union trust was not submitted to the Legislature, the policy issues related to the change in the structure of the governance of the Health Fund to an employer-union trust have not been considered or discussed by the Legislature; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-first Legislature of the State of Hawaii, Regular Session of 2001, the Senate concurring, that the Director of Finance is requested to reconvene the committee established by Act 309, Session Laws of Hawaii 1996, to assess the policy issues relating to the change in the structure of governance of the Public Employees Health Fund to an employer-union trust, including required or recommended changes to chapters 87 and 89, Hawaii Revised Statutes; and

BE IT FURTHER RESOLVED that, in addition to the representatives from state and county public employers and public employee organizations as mandated by Act 309, the Legislature further requests that committee members include representatives of retired public employees; and

BE IT FURTHER RESOLVED that the Director of Finance is requested to submit the committee's findings and recommendations, including proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2002; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Director of Finance, the Attorney General, and the Administrator and Chairperson of the Public Employees Health Fund, who, in turn, is requested to transmit copies of this Concurrent Resolution to representatives of state and county public employers and public employee organizations.