Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committees on Health and Human Services, to which was referred S.B. No. 1088 entitled:

beg leave to report as follows:

The purpose of this measure is to establish a long-term care social insurance program, setting long-term care income tax rates, manner of payment, and long-term care benefits.

Testimony in support of this measure was submitted by the Temporary Board of Trustees, Long Term Care Financing Act; Hawaii State Commission on the Status of Women; Maui Economic Opportunity, Inc.; ILWU Local 142; Hawaii State Teachers Association (HSTA); Hawaii State Teachers Association—Retired; Hawaii Long-Term Care Association; Coalition for Affordable Long-Term Care; Faith Action for Community Equity; Kokua Council; Healthcare Association of Hawaii; and twelve concerned citizens. Testimony opposing this measure was submitted by the Health Insurance Association of America; NAIFA Hawaii--Association of Insurance and Financial Advisors; Chamber of Commerce of Hawaii; Legislative Information Services of Hawaii; Hawaii Medical Association; and two concerned citizens. The Department of Taxation; Office of Information Practices; and the Tax Foundation of Hawaii submitted comments on the measure.

Your Committees find that the issues surrounding long-term care will continue to challenge our State. Your Committees heard testimony from a number of individuals who stated that they could not afford the cost of long-term care insurance. A recent study shows that the median income for senior citizens in our State is $18,735, and 41,000 seniors have incomes below 150% of the federal poverty level.

Your Committees find that Act 245, Session Laws of Hawaii 2002, established a Temporary Board of Trustees of the Long-Term Care Financing Act, to study this issue and to propose a tax collection program, a tax rate, and a benefit schedule for an actuarily sound long-term care social insurance program for Hawaii taxpayers. This measure is one result of that effort. Your Committees recognize and commend the members of the Temporary Board of Trustees for their dedication and hard work over the past year.

Your Committees further find that, in developing the proposed long-term care income tax, the Temporary Board of Trustees sought information and advice from one of the two national actuaries engaged by the federal Office of Personnel Services to evaluate long-term care insurance proposals for coverage of federal government employees. The Trustees also sought to respond to questions and issues raised during the 2002 Legislative Session by legislators and others.

Your Committees find that the Legislature must responsibly address the spiraling cost of long-term care, and therefore are passing this measure out to facilitate further discussion of this important issue.

Your Committees have amended this measure by amending section 235-G(c) to state that data and documents used or prepared by the actuary in preparing the actuarial report shall be subject to chapter 92F.

As affirmed by the records of votes of the members of your Committees on Health and Human Services that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 1088, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 1088, S.D. 1, and be referred to the Committee on Ways and Means.