Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii

Sir:

Your Committee on Health and Human Services, to which was referred S.B. No. 2086 entitled:

begs leave to report as follows:

The purpose of this measure, as referred to your Committee, was to require the insurance commissioner, rather than the prepaid health care advisory council, to render advice to the director of labor and industrial relations regarding the prepaid health care Act.

Your Committee received testimony in support of this measure from the Hawaii Medical Association. The department of labor and industrial relations submitted testimony in opposition to this measure, and the insurance division of the department of commerce and consumer affairs submitted comments.

Your Committee finds that the prepaid health care advisory council, which advises the director of labor and industrial relations regarding the prepaid health care Act, is slow to approve new health plans seeking entry in Hawaii. As a result, there is a lack of competition in the marketplace for prepaid health care plans.

Your Committee believes that involving the insurance commissioner in the approval process will exacerbate the problem rather than speed up the process. Given the large number of residents lacking adequate health care coverage, your Committee believes that the State should do everything possible to streamline the approval process for new entrants in the health care market, while maintaining stringent requirements to ensure that only qualified entities are admitted.

Therefore, your Committee amended this measure to require that no member of the insurance industry is involved with the prepaid health care advisory council. Your Committee finds that it is inappropriate to include the insurance commissioner on the council.

In addition, your Committee amended this measure to create a temporary prepaid health care plan legislative commission. This commission, which shall exist until June 30, 2003, shall include nine members to be appointed by the Governor. The commission will develop legislation to be submitted to the United States Congress for federal consideration, regarding several aspects of the prepaid health care system. The commission will report to the legislature, including submission of its draft legislation, prior to the 2003 regular session.

As affirmed by the record of votes of the members of your Committee on Health and Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2086, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2086, S.D. 1, and be referred to the Committee on Commerce, Consumer Protection and Housing.