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 S.B. No. 1321, H.D. 1, entitled:

begs leave to report as follows:

The purpose of this bill is to provide for mental health parity by:

Testimony in support of this bill was submitted by the Governor, the Department of Health, Mental Health Association in Hawaii, Hawaii Government Employees Association, Hawaii Psychiatric Medical Association, Hawaii Psychological Association, Equal Insurance Coalition, NAMI Oahu, Hawaii Coalition for Health, Hawaii Medical Association, a consumer advocate, and several concerned citizens. The Department of Commerce and Consumer Affairs, National Association of Social Workers, and Blueprint for Change testified in support of this measure and suggested amendments.

Testimony in opposition was submitted by the Chamber of Commerce of Hawaii, Hawaii Medical Service Association, and the National Federation of Independent Business. Kaiser Permanente voiced comments and concerns.

This bill includes provisions that expand the definition of "serious mental illness" to include coverage for a new set of illnesses. Whenever any new mandated health insurance coverage is proposed, section 23-51, Hawaii Revised Statutes (HRS), or the "sunrise law," requires an Auditor's report assessing the coverage's social and financial effects before it is considered by the Legislature.

The Auditor conducted a study on mental illness coverage parity in 1997. However, the report is six years old and was not conducted for the purpose of evaluating the new coverages proposed by this bill. The study assessed parity of coverage for the full range of mental health and substance abuse illnesses, and also lacked focus because the term "parity" was undefined and there was little experience with parity in other states upon which the Auditor could rely. In addition, in 1998, mental health coverage under chapter 431M, HRS, was expanded from 12 to 24 outpatient visits. For these reasons, your Committee finds that the study does not provide assistance in evaluating the social and financial impacts of this bill and is not an appropriate basis for compliance with section 23-51, HRS.

Your Committee has reviewed the opinion of the Attorney General finding that as a matter of law, the Legislature's power to enact law is not bound by statutes enacted by prior legislatures. Your Committee is aware that it is within the power of this Legislature to repeal, amend, or ignore the sunrise law. However, your Committee believes that so long as it remains law, your Committee should comply with its spirit, intent, and terms.

The sunrise law establishes a fair and practical procedure for evaluating new health coverages and ensuring that the costs of these coverages are justified. Your Committee believes that this evaluation is not only necessary and beneficial, but that it should be applied fairly and even-handedly to all of the many new proposed health coverages that are introduced in the Legislature each session.

Further, your Committee finds that a costs study is imperative, especially given today's uncertain economic climate and the rising cost of health care, recent health plan premium increases, and the potential impact that any new mandated health benefit would have on employers.

Finally, your Committee believes that it is important to ensure that there continues to be basic mental health parity coverage as first enacted in Act 121, SLH 1999.

Accordingly, your Committee has amended this bill to replace its contents with those of H.B. No. 259, H.D. 2. This amendment:

Your Committee understands that concurrent resolutions requesting a sunrise study of the coverages removed from this bill will be heard this session, and that upon passage of these resolutions, an Auditor's study will be available as a basis upon which the Legislature may consider enactment of these expanded coverages in the 2004 Regular Session.

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 is in accord with the intent and purpose of S.B. No. 1321, H.D. 1, as amended herein, and recommends that it be referred to the Committee on Finance in the form attached hereto as S.B. No. 1321, H.D. 2.