STAND. COM. REP. NO. 484

Honolulu, Hawaii

RE:    S.B. No. 1406

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2007

State of Hawaii

Madam:

     Your Committee on Health, to which was referred S.B. No. 1406 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to ensure that all individuals, particularly self-employed individuals and part-time employees, have access to affordable health insurance.

     This measure attempts to accomplish this goal by amending the State's Insurance Code to include within the definition of "employee" individuals who work full-time, part-time, and who are self-employed.  Further, it clarifies that a self-employed individual is a person operating their own business, as a sole proprietorship or in any other legally recognized manner, and who has a general excise tax license for that business.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs and the Hawaii Association of Realtors.  The Chamber of Commerce of Hawaii submitted testimony supporting the intent of this measure with comments.  Hawaii Medical Service Association and Kaiser Permanente submitted comments on this measure.

     Your Committee finds that most health insurers do not provide a group health policy to sole proprietors unless they have become incorporated.  The existing insurance statute does not clearly include the self-employed, such as sole proprietors, in the definition of "small business".  Thus, many sole proprietors are without health insurance despite the fact that they are businesses just as any other business.

     Your Committee has amended this measure by:

     (1)  Reinstating the definition of employee to mean only those who work on a full-time basis with a normal work week of twenty hours or more;

     (2)  Defining "qualifying event" as the date of issuance of a general excise tax license, the loss of a job, a reduction in hours of work, or the exhaustion of COBRA continuation coverage that results in a loss of health care coverage;

     (3)  Adding an implementation date of September 1, 2007, by which issuers shall offer small group health plans to self-employed individuals;

     (4)  Providing an option to group health issuers to limit periods of enrollment for self-employed individuals to a minimum of thirty calendar days; and that:

          (A)  Self-employed individuals who experience a qualifying event must enroll with a group health issuer within thirty days of the occurrence of the qualifying event; and

          (B)  Group health issuers shall be allowed to impose a one year waiting period against self-employed individuals who terminate coverage for any reason.  In the event a self-employed individual terminates coverage and a one year waiting period is imposed against the individual, a group health issuer may not re-enroll the individual until the period of enrollment following the one year waiting period;

     (5)  Changing the effective date to encourage further discussion and work on this measure; and

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

     As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1406, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1406, S.D. 1, and be referred to the Committee on Commerce, Consumer Protection, and Affordable Housing.

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

____________________________

DAVID Y. IGE, Chair