Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Consumer Protection and Commerce, to which was referred H.C.R. No. 88 entitled:

begs leave to report as follows:

The purpose of this concurrent resolution is to request the Auditor to conduct a comparative analysis of the State's health insurance market and the insurance markets of the rest of the nation.

Testimony in support of this measure was received from the Hawaii State Teachers Association, Aloha Care, Mestizo Association, and Kaiser Permanente. The Hawaii Medical Service Association offered comments. The Insurance Division of the Department of Commerce and Consumer Affairs offered comments and an amendment.

Although Hawaii's health care costs are among the lowest in the nation, these costs are rising and are forcing health insurance premium rate increases. Your Committee finds that the development of an appropriate regulatory response by the Legislature requires an understanding of the cost drivers that contribute to these increases.

The study requested by this concurrent resolution will provide information on the differences between Hawaii's health insurance market and those of the rest of the nation, which will lead to a better understanding of Hawaii's insurance market, and meaningful and effective heath policy and legislation.

Your Committee finds that if the study is to be helpful to policy makers in Hawaii, it must compare Hawaii's health insurance market to similarly populated states with comparable coverage and other appropriate variables as determined in the analysis.

Accordingly, your Committee has amended this concurrent resolution by requiring that the audit include:

1. An analysis comparing Hawaii's health insurance market to health insurance markets with not only similar populations, but also comparable coverage, including but not limited to the scope and quality of such coverage, and any other variables determined to be appropriate to ensure an objective review;
2. A determination of what barriers to entry insurers seeking to enter the Hawaii health insurance market face;
3. A comparative analysis of provider reimbursement rates in Hawaii and in similar markets; and
4. A determination of whether "cost shifting" of unpaid public payer costs to private payers affects consumer health insurance costs in Hawaii.

As affirmed by the record of votes of the members of your Committee on Consumer Protection and Commerce that is attached to this report, your Committee concurs with the intent and purpose of H.C.R. No. 88, as amended herein, and recommends that it be referred to the Committee on Finance in the form attached hereto as H.C.R. No. 88, H.D. 1.