Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Education and Labor & Public Employment, to which was referred H.B. No. 1608 entitled:

beg leave to report as follows:

The purpose of this bill is to enable public employee organizations to provide better health benefits for its members by allowing the organizations to launch a three-year pilot program in which Voluntary Employees' Beneficiary Association (VEBA) trusts are established according to certain requirements.

The Hawaii State Teachers Association, Hawaii Government Employees Association, and numerous concerned individuals testified in support of this bill. The Department of Budget and Finance opposed this measure. The Department of Human Resources Development offered comments.

Although concerns were raised regarding adverse selection, your Committees believe the benefits derived from establishing VEBA trusts outweigh these concerns. Your Committees believe this bill warrants further discussion, and respectfully request that your Committee on Finance study the fiscal impact of establishing VEBA trusts in the state.

As affirmed by the records of votes of the members of your Committees on Education and Labor & Public Employment that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1608 and recommend that it pass Second Reading and be referred to the Committee on Finance.