CONFERENCE COMMITTEE REP. NO.139
Honolulu, Hawaii
, 2001
RE: S.B. No. 1046
S.D. 1
H.D. 1
C.D. 1
Honorable Robert Bunda
President of the Senate
Twenty-First State Legislature
Regular Session of 2001
State of Hawaii
Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twenty-First State Legislature
Regular Session of 2001
State of Hawaii
Sir:
Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 1046, S.D. 1, H.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO THE PUBLIC EMPLOYEES HEALTH FUND,"
having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.
The purpose of this measure is to:
(1) Limit state and county contributions for public employees health benefits expenditures to the amount appropriated in fiscal year 2001-2002; and
(2) Provide that amounts subject to a collective bargaining agreement in effect on July 1, 2001, be appropriated until the expiration of the collective bargaining agreement.
Your Committee on Conference finds that the State and the counties face an unfunded liability for payment of health benefits for their public employees of a high of $24,800,000,000 for 2013, as projected by the Auditor in its 1999 Actuarial Study and Operational Audit of the Hawaii Public Employees Health Fund. Low and intermediate estimates are not much lower and range from $7,900,000,000 to $11,400,000,000. As of 1998, the unfunded liability for the Public Employees Health Fund had already reached a high of $7,400,000,000 with low and intermediate projections of $3,600,000,000 and $4,500,000,000.
Currently, the system of providing health benefits to public employees operates by paying for benefits contracted for by the public employees health fund on a "pay as you go" basis, without any limits on cost. In the past, when health care costs were minimal and health benefits were not considered a significant component of an employee's compensation, this was not an issue. However, as more advanced treatment, procedures, and medications are developed, their costs have also increased. Health benefits are now considered an extremely important part of an employee's compensation precisely because health care now costs so much. In addition, as more employees begin to live longer and as they learn to demand to use more benefits, the system is proving unable to keep up. The reality is that the State and the counties will be unable to pay for health benefits for their employees in the future without seriously cutting from other portions of governmental budgets if no changes are made.
However, your Committee on Conference is keenly aware of the negative ramifications an expenditure ceiling will have on the provision of health benefits to public employees. The implementation of an expenditure ceiling without adjusting existing statutorily mandated health benefits would inevitably result in the placement of a majority of public employees under the care of health maintenance organizations...thus diminishing a public employee's ability to choose a health care provider. Consequently, your Committee on Conference does not believe that simply implementing an expenditure ceiling strikes a balance between the necessity of the employer to contain health benefits costs and the ability of the employee to choose a health care provider.
Therefore, your Committee intends to address the issue of spiraling costs by not only instituting a ceiling on public expenditures for health benefits for public employees and retirees, but also allowing the Public Employees Health Fund to craft health benefits plans within the employer's fiscal limitations. This amended measure expressly provides the Public Employees Health Fund with greater flexibility to, among other things, determine the types of plans, the design of plans, and the delivery of plan services.
Upon further consideration and based on this intent, your Committee on Conference has amended the measure by:
(1) Recasting the purpose section of the measure to reflect this intent;
(2) Deleting section 2 of the measure, which amended section 87-4(a), Hawaii Revised Statutes, the amendments to which limit the amount public employers pay to the Public Employees Health Fund to Fiscal Year 2001-2002 levels;
(3) Adding five new sections which:
(A) Amend section 87-4.5(b), Hawaii Revised Statutes, relating to health benefits of employees who retire with fewer than ten years of service, by enabling the Health Fund to design a health benefits plan for these retirees;
(B) Amend section 87-4.5(e), Hawaii Revised Statutes, to conform that subsection with the amendments made to section 87-4.5(b), Hawaii Revised Statutes;
(C) Amend section 87-4.6(c), Hawaii Revised Statutes, relating to health benefits of employees who were hired after June 30, 1996, and retire with fewer than twenty-five years of service, by enabling the Health Fund to design a health benefits plan for these retirees;
(D) Amend section 87-4.6(f), Hawaii Revised Statutes, to conform that subsection with the amendments made to section 87-4.6(c), Hawaii Revised Statutes; and
(E) Amend section 87-22, Hawaii Revised Statutes, relating to the determination of health benefits plans, by providing the Health Fund with the authority to design health benefits plans for all beneficiaries of the Health Fund; and
(4) Amending the section of the measure that amends section 87-27, Hawaii Revised Statutes, relating to the Health Fund paying for supplemental plans to Medicare, by:
(A) Deleting the existing amendments;
(B) Inserting a fixed reimbursement amount of $50 per month, or the Medicare plan rate, whichever is less, that the Health Fund will pay to qualified enrollees in supplemental Medicare plans; and
(C) Providing that the benefits of the supplemental Medicare plan authorized by the Health Fund, when combined with Medicare, shall be comparable to health benefits plans provided to employee-beneficiaries and their spouses who are not eligible for Medicare.
Your Committee on Conference believes that the amended measure will not only contain costs for the public employer, but will also result in better, more well-suited, health benefits plans for each beneficiary of the Public Employees Health Fund.
As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 1046, S.D. 1, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 1046, S.D. 1, H.D. 1, C.D. 1.
Respectfully submitted on behalf of the managers:
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ON THE PART OF THE HOUSE |
ON THE PART OF THE SENATE |
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____________________________ SCOTT K. SAIKI, Chair |
____________________________ COLLEEN HANABUSA, Chair |
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____________________________ BOB NAKATA, Co-Chair |