Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committees on Health and Human Services and Commerce, Consumer Protection and Housing, to which was referred H.B. No. 237, H.D. 2, entitled:

beg leave to report as follows:

The purpose of this measure is to create a mandated health insurance service review panel to assess social, medical, and financial impacts of mandated health insurance coverage and recommend a cap on the cost of mandated health insurance coverage in terms of percentage of average annual state wage.

Your Committees received testimony in favor of this measure from Legislative Information Services of Hawaii, Hawaii Nurses' Association, National Federation of Independent Business, NAMI Oahu: Oahu's Voice on Mental Illness, Hawaii Medical Service Association, and Kaiser Permanente. Your Committees received testimony opposing this measure from the State Auditor and Hawaii Psychological Association. Your Committees received comments on this measure from the Department of Commerce and Consumer Affairs Insurance Division and the Office Of Information Practices.

Your Committees find that the assessment reports made by the Legislative Auditor as required by section 23-51, Hawaii Revised Statutes, have been a useful tool in considering the value of proposed new mandated health benefits. These assessments however, are limited in their scope and purpose and may not always capture the full impact of the proposed change. The panel proposed by this measure may be better able to meet the needs of the legislature in collecting information on new health benefits because the panel will be a more flexible forum for review of the issues surrounding benefits.

Your Committees have amended this measure by defecting the effective date as a means of channeling the measure to conference.

Your Committees are supportive of the concept of a review panel, however, the State Auditor raised some concerns about potential conflicts of interest arising from the State Auditor's membership on the panel. For example, one of the panel's duties is to evaluate cost and recommend a cap. If the legislature required a financial or management audit of the mandated health insurance coverage program, by being party to recommended cost caps, the Auditor would be both the auditor and auditee. Thus, your Committees are requesting the Committee on Ways and Means to consider amending this measure to either make the panel advisory to the State Auditor with the Auditor's current responsibilities in place, or remove the language which places the Auditor at conflict with the panel.

As affirmed by the records of votes of the members of your Committees on Health and Human Services and Commerce, Consumer Protection and Housing that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 237, H.D. 2, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 237, H.D. 2, S.D. 1, and be referred to the Committee on Ways and Means.