CONFERENCE COMMITTEE REP

CONFERENCE COMMITTEE REP. 127

Honolulu, Hawaii

, 2003

RE: S.B. No. 789

S.D. 1

H.D. 2

C.D. 1

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Conference on the disagreeing vote of the Senate to the amendments proposed by the House of Representatives in S.B. No. 789, S.D. 1, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO PUBLIC EMPLOYEE HEALTH BENEFITS,"

having met, and after full and free discussion, has agreed to recommend and does recommend to the respective Houses the final passage of this bill in an amended form.

The purpose of this measure is to establish a schedule for the caps on the employer contributions for health benefits under the Employer-Union Health Benefits Trust Fund (EUTF), effective July 1, 2004.

This measure also:

(1) Prohibits the employer's monthly contribution from exceeding the actual cost of the health benefits plan and from covering increased benefits beyond those initially contracted for by the EUTF for plan year 2004-2005;

(2) Requires that the adjusted base composite monthly contribution be adjusted annually, beginning July 1, 2005, and calculated using the highest actual contracted premium rate for health benefits plans as of July 1, 2004; and

(3) Appropriates the sum of $12.5 million for additional employer contributions for retiree health benefit plans for fiscal year 2004-2005.

Your Committee on Conference finds that due to the rising cost of health coverage a new employer contribution schedule is needed. Similarly, with a new schedule in effect beginning July 1, 2004, any adjustment to the base composite monthly contribution need not be made until July 1, 2005. At the same time, however, your Committee on Conference is mindful of the current fiscal restraints plaguing our economy that also necessitates the prohibition of the payment of an employer contribution that exceeds the actual cost of health benefit plans or that covers increased coverage beyond that which was contracted for by the fund for plan year 2004-2005. Consequently, your Committee on Conference also determines that the appropriation of funds is equally necessary to cover the increased costs associated with the purposes of this Act.

Your Committee on Conference also recognizes that the increase in costs extends to the Medicare Part B premium and has amended the measure to require the EUTF to pay for the entire cost of the Medicare Part B premium and reimburse the retiree for any cost differential due to any such rate increase within thirty days of the rate change. Additionally, due to its inclusion in the State Budget, your Committee on Conference has amended the measure by deleting the appropriation of the sum of $12.5 million for additional employer contributions for retiree health benefits for fiscal year 2004-2005.

As affirmed by the record of votes of the managers of your Committee on Conference that is attached to this report, your Committee on Conference is in accord with the intent and purpose of S.B. No. 789, S.D. 1, H.D. 2, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S.B. No. 789, S.D. 1, H.D. 2, C.D. 1.

Respectfully submitted on behalf of the managers:

ON THE PART OF THE HOUSE

ON THE PART OF THE SENATE

____________________________ MARCUS R. OSHIRO, Co-Chair		____________________________ BRIAN KANNO, Chair
____________________________ DWIGHT Y. TAKAMINE, Co-Chair		____________________________ BRIAN T. TANIGUCHI, Co-Chair