STAND. COM. REP. NO.  1861

Honolulu, Hawaii

                , 2007

RE:   S.B. No. 12

      S.D. 2

      H.D. 2

Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Sir:

     Your Committee on Finance, 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 fair pricing methodologies in the health insurance market by:

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

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

(3)  Establishing penalties and appeal procedures.

     The Department of Commerce and Consumer Affairs, Hawaii State Teachers Association, Hawaii Government Employees Association, International Longshore and Warehouse Union, Hawaii Association of Realtors, Kokua Council, and a concerned individual supported this bill.  The Hawaii Medical Service Association and Kaiser Permanente opposed this measure.  AlohaCare submitted comments.

     Your Committee has amended this bill by:

(1)  Excluding managed care plans established or funded by any federal, state, or county government, including plans established under Medicare, Medicaid, Federal Employee Health Benefits Act, Tricare, QUEST, Hawaii Employer-Union Health Benefits Trust Fund, State Health Insurance Program, and similar government programs;

(2)  Requiring any managed care plan whose reserves exceed 50 percent of its annual total expenses, to reimburse the excess moneys to the subscribers, the enrollees, or the customers in accordance with a plan submitted to and approved by the commissioner;

(3)  Inserting provisions exempting managed care plans whose only source of revenue is government contracts;

(4)  Changing the effective date to January 1, 2008;

(5)  Inserting a sunset date of January 1, 2011; and

(6)  Making technical, nonsubstantive changes for clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Finance 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, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 12, S.D. 2, H.D. 2.

Respectfully submitted on behalf of the members of the Committee on Finance,

____________________________

MARCUS R. OSHIRO, Chair