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. 2873 entitled:

beg leave to report as follows:

The purpose of this bill is to promote the health of Hawaii's people by establishing a Health Savings Program (Program) to enable residents to save for certain health-related expenses through Health Savings Accounts (Accounts). Under the Program, residents of the State can benefit from the tax incentive provided for such Accounts due to the passage of the federal Prescription Drug Improvement and Modernization Act of 2003.

The Department of Labor and Industrial Relations, Hawaii Medical Association, Chamber of Commerce of Hawaii, National Federation of Independent Business-Hawaii, Grassroot Institute of Hawaii, Hawaii Medical Service Association, and a concerned individual testified in support of this bill. Kaiser Permanente supported the intent of the measure. ILWU Local 142 opposed the bill. The Department of Commerce and Consumer Affairs and Department of Budget and Finance submitted comments.

Your Committees have concerns regarding:

Your Committees believe that such an important matter warrants further deliberation and respectfully request that the Committee on Finance thoroughly scrutinize the requirements placed on employers with respect to the receipt of the tax incentive offered under this bill.

For purposes of facilitating continued discussion, your Committees have amended the measure by inserting a defective effective date of February 31, 3003. Technical, nonsubstantive amendments were also made for purposes of clarity, style, and consistency.

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. 2873, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 2873, H.D. 1, and be referred to the Committee on Finance.