Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Labor and Public Employment, to which was referred H.C.R. No. 43 entitled:

begs leave to report as follows:

The purpose of this concurrent resolution is to request the Department of Labor and Industrial Relations (DLIR) and Hawaii's health plan carriers to explore options for redesigning the benefit levels of "A" status plans defined under Hawaii's Prepaid Health Care Act (PHCA).

The National Federation of Independent Business and Hawaii Medical Service Association testified in support of this measure. Kaiser Permanente testified in support of the intent of this measure. DLIR opposed this measure.

PHCA is a unique program that has made Hawaii one of the most successful states in ensuring that its citizens have health insurance. However, the age of PHCA and its numerous mandated benefits have made it difficult for businesses, especially small businesses, to continue to provide health insurance for its employees. Although the intent of PHCA was for employers and employees to share the costs of health care, a cap on the maximum employee contribution of 1.5 percent of the employee's gross income, combined with the exponentially increasing costs of health care, has caused employers to bear most of the costs of providing health insurance. Moreover, fears over the loss of the exemption from the Employee Retirement Income Securities Act currently enjoyed by Hawaii have made amending PHCA difficult, if not impossible.

Your Committee recognizes that something must be done to make PHCA fair to all parties involved and that the exploration of options for redesigning the benefit levels of "A" status plans as defined under PHCA is a step in the right direction. However, your Committee is also cognizant of the concerns raised by DLIR regarding the determination of "A" status plans and whether its Director has the authority to make such a determination. Accordingly, although recommending adoption of this measure for further discussion, your Committee respectfully requests the Director of Labor and Industrial Relations to obtain a legal opinion and interpretation of the law regarding the determination of the benefit level of plans and submit these opinions to members of your Committee on Labor and Public Employment.

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 concurs with the intent and purpose of H.C.R. No. 43 and recommends its adoption.