STAND. COM. REP. NO.  1429

Honolulu, Hawaii

                , 2007

RE:   S.B. No. 12

      S.D. 2

      H.D. 1

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Sir:

     Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 12, S.D. 2, H.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO HEALTH INSURANCE RATE REGULATION,"

begs leave to report as follows:

     The purpose of this bill is to ensure reasonable health insurance rates by:

(1)  Prohibiting rates that are excessive, inadequate, or unfairly discriminatory; and

(2)  Requiring health care insurers to submit rate filings for approval by the Insurance Commissioner.

     The Department of Commerce and Consumer Affairs, Hawaii State Teachers Association, Hawaii Association of REALTORS, ILWU Local 142, Hawaii Government Employees Association, Kokua Council, and several concerned individuals testified in support of this bill.  Hawaii Medical Service Association and Kaiser Permanente opposed this measure.  The Department of Taxation and AlohaCare submitted comments.

     Your Committee was informed by AlohaCare of its concerns regarding the potentially negative impacts that the provision in this bill capping reserves at 30 percent of annual total expenses might have on health plans whose revenues are solely received from government contracts, such as contracts for QUEST and Medicare.  Accordingly, your Committee respectfully requests the Committee on Finance, in its review of this bill, to consider whether health plans that exclusively receive their total revenues from government contracts should be exempted from the provision on reserves.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 12, S.D. 2, H.D. 1, and recommends that it be referred to the Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,

____________________________

ROBERT N. HERKES, Chair