STAND

STAND. COM. REP. NO. 159-04

Honolulu, Hawaii

, 2004

RE: H.B. No. 2408

H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committees on Labor and Public Employment and Health, to which was referred H.B. No. 2408 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

beg leave to report as follows:

The purpose of this bill is to increase the availability of affordable health benefits. Among other things, this bill:

(1) Allows health insurers to treat a trade association and its members as a single group for the purpose of issuing a health insurance policy;

(2) Allows members of the trade association to opt out of the group policy and obtain their own insurance; and

(3) Prohibits a health insurer from restricting the types or numbers of health plans of other insurers that the association may offer to its members.

The Insurance Division of the Department of Commerce and Consumer Affairs, Department of Labor and Industrial Relations, Hawaii Medical Association, National Federation of Independent Business, Legislative Information Services of Hawaii, Hawaii State Bar Association, Hawaii Financial Store, Inc., PKF Hawaii, LLP, Hawaii Transportation Association, and H2O Transportation supported this measure. Kaiser Permanente and Chamber of Commerce of Hawaii supported the intent of the measure. HMSA opposed the measure.

Health care costs are of concern to every individual. Skyrocketing health care costs have made it difficult, especially for small businesses, to obtain affordable health insurance. Unlike large corporations, the size of a small business is detrimental to its obtaining affordable health care insurance.

Your Committees note that one method of combating high health care costs is through allowing businesses to band together to purchase health insurance through trade associations.

Your Committees are not fully convinced that this measure is the "magic bullet" that will lower the costs of health care for small businesses. However, the Legislative Information Services of Hawaii and other organizations have managed trade association plans for the past twenty years with reportedly good results, which seem to indicate that this type of mechanism does work.

Your Committees have amended this measure by:

(1) Restricting coverage to "bona fide" trade associations for purposes of conforming to the Health Insurance Portability and Accountability Act of 1996;

(2) Defining "bona fide trade association";

(3) Allowing a designated agent of a bona fide trade association to administer the association's program;

(4) Changing the effective date to July 1, 2020, for purposes of furthering discussion; and

(5) Making technical, nonsubstantive amendments for purposes of clarity, consistency, and style.

Your Committees request that the Insurance Commissioner make available to your Committees and the Committee on Consumer Protection and Commerce to which this bill is referred, the federal case raising issues concerning the legality of legislation of this type.

As affirmed by the records of votes of the members of your Committees on Labor and Public Employment and Health that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 2408, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2408, H.D. 1, and be referred to the Committee on Consumer Protection and Commerce.

Respectfully submitted on behalf of the members of the Committees on Labor and Public Employment and Health,

____________________________ DENNIS A. ARAKAKI, Chair		____________________________ MARCUS R. OSHIRO, Chair