Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred S.B. No. 1058, S.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to reduce public employer costs by requiring that the amount ported to employee organizations for health benefit plans and group life insurance be based on the most cost effective plan that provides the same level of benefits for participants in the plans of the Public Employee Health Fund (PEHF) and employee organizations.

This bill also:

The Department of Budget and Finance (B&F) supported this bill but suggested an amendment. The Hawaii State Teachers Association, the United Public Workers, AFSCME, Local 646, AFL-CIO, and the Hawaii Government Employees Association, AFSCME Local 152, AFL-CIO opposed this measure.

PEHF offered comments.

According to B&F, PEHF ports employer contributions for health benefit and group life insurance plans to employee organizations for employee-beneficiaries enrolled in employee organization health plans. Currently, the amount ported is based on the benefit plan with the largest enrollment as set forth in negotiated public sector collective bargaining agreements.

Over the years, PEHF has experienced higher employer costs due to competition with employee organization health plans that enroll employees who are younger as well as families that are smaller than those enrolled in PEHF plans. PEHF ports contributions based on this higher rate of contribution to employee organizations, which can offer more attractive plans because of its enrollee population and lower contribution rates. As a result or this arrangement, PEHF plans are adversely affected.

B&F stated concerns about the bill's 60 percent of actual plan cost limit on employer contributions, and requested amendments eliminating any reference to a specific percentage limit. Your Committee requests that the Committee on Finance examine and resolve B&F's concerns, which are financial in nature.

As affirmed by the record of votes of the members of your Committee on Labor and Public Employment that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1058, S.D. 1, and recommends that it pass Second Reading and be referred to the Committee on Finance.