STAND. COM. REP. NO. 1243

Honolulu, Hawaii

RE:    H.B. No. 1479

       H.D. 2

       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 H.B. No. 1479, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO HEALTH INSURANCE SUPPORT FOR SMALL BUSINESSES,"

begs leave to report as follows:

     The purpose of this measure is to require, beginning September 1, 2007, all group health issuers to offer small group health plans to self-employed individuals who live, work, or reside in a group health issuer's service area.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs; Hawaii Association of Realtors; and Maui Chamber of Commerce.  Comments were received from the Hawaii Medical Service Association and Kaiser Permanente.

     Your Committee finds that existing law does not specifically provide for mandatory health insurance coverage for self-employed individuals such as sole proprietors.  As a result, most health insurers do not provide a group policy to sole proprietors unless they become incorporated.  Sole proprietors may not incorporate because of burdensome administrative formalities associated with incorporation.  This means that many sole proprietors are subject to the pre-existing condition exclusions in individual policies and are subject to medical underwriting despite the fact that they are businesses just like any other business.

     The intent of this measure is to provide parity for sole proprietorships by requiring group health issuers to offer group health insurance policies to the self-employed.  This would put them on the same footing with corporations and other business entities in obtaining health insurance.

     Your Committee is cognizant of the testimony to the effect that this measure may result in possible adverse actuarial consequences to small group underwriting by way of higher premiums.  Nonetheless, your Committee believes this measure is necessary in the interests of promoting health in the population as a whole, inasmuch as sole proprietors represent a significant number of business owners in Hawaii.

     Your Committee has amended this measure by making technical, nonsubstantive amendments for the purposes of consistency and style and by changing the effective date to July 1, 2050.

     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 H.B. No. 1479, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1479, H.D. 2, 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