Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committees on Labor and Public Employment and Economic Development and Business Concerns, to which was referred H.B. No. 2835 entitled:

beg leave to report as follows:

The purpose of this bill is to review mandated health care coverage.

Specifically, this bill relieves the State Auditor of duties to review mandated health care coverage proposals by creating a Health Insurance Services Review Panel (Review Panel) which shall:

The Chamber of Commerce of Hawaii, Hawaii Medical Services Association, Hawaii Psychological Association, and the Department of Commerce and Consumer Affairs testified in support of this bill. Kaiser Permanente and Hawaii Medical Association supported the intent of this measure. The Office of the Auditor and the Office of Information Practices submitted comments stipulating their concerns with this measure.

The Prepaid Health Care Act was enacted in 1974 as a means to provide health care coverage to all of Hawaii's citizens through means of equal sharing of health care costs between an employee and the employer. However, skyrocketing health care costs have caused this benefit to put a strain on businesses, especially small businesses who often are forced to cut back an employee's hours or lay off employees as a means of reducing health care premium costs. Moreover, mandated health care coverage for numerous conditions have been passed since 1974, including 13 new mandates since 1998, adding to the burden on employers. Many of these mandates have also been passed without a review being conducted by the State Auditor and without knowledge of the implications of these mandated benefits.

In 2001, a Mandated Benefits Advisory Task Force (Task Force) was convened by the Legislature to determine a process to review all future mandated health benefits and asses their implications. This Task Force recommended the creation of a Review Panel.

However, your Committees understand the concerns of the State Auditor that the inclusion of the Office of the Auditor on the Review Panel may result in a conflict of interest. Nevertheless, your Committees feel that this is an important matter that warrants further discussion.

As affirmed by the records of votes of the members of your Committees on Labor and Public Employment and Economic Development and Business Concerns that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2835 and recommend that it pass Second Reading and be referred to the Committee on Finance.