Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred H.B. No. 590, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this measure is to impose a higher standard of financial responsibility to protect health plan solvency by adding a new net worth requirement for mutual benefit societies and health maintenance organizations equal to a minimum of three times the average of monthly net claims paid during the past calendar year.

Testimony in support of this measure was received from the Insurance Commissioner and AlohaCare.

Your Committee finds that the intent of this measure is to bolster public confidence in the financial stability of health insurers in Hawaii, which has been shaken by recent insolvencies of the Pacific Group Medical Association and the Hawaii Healthcare Alliance.

Your Committee has heard concerns, however, that the language in this measure may not be the most appropriate approach, and that the language in S.B. No. 1066, H.D. 1, better addresses the needs of those who would be affected by the proposed changes.

Your Committee has amended this measure by incorporating language from S.B. No. 1066, H.D. 1, to:

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 590, H.D. 1, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 590, H.D. 1, S.D. 1, and be placed on the calendar for Third Reading.