STAND. COM. REP. NO. 2488

Honolulu, Hawaii

RE:    S.B. No. 2314

       S.D. 1

Honorable Colleen Hanabusa

President of the Senate

Twenty-Fourth State Legislature

Regular Session of 2008

State of Hawaii

Madam:

     Your Committee on Health, to which was referred S.B. No. 2314 entitled:

"A BILL FOR AN ACT RELATING TO INSURANCE,"

begs leave to report as follows:

     The purpose of this measure is to allow small insurers with less than ten per cent of the market share to offer different types of benefits in a single unified policy.

     Your Committee received testimony in support of this measure from the Hawaii Medical Assurance Association.  Your Committee received testimony in opposition to this measure from the Department of Commerce and Consumer Affairs, Hawaii Insurers Council, State Farm Insurance Companies, and Hawaii Medical Service Association.

     Your Committee finds that this measure is intended to help self-employed workers and small businesses by allowing broader coverage for less cost without affecting the Prepaid Health Care Act.  However, your Committee further finds that this measure needs to be limited in scope to ensure that it does not cause unintended consequences.

     Accordingly, your Committee has amended this measure by:

     (1)  Clarifying that the exemption applies only to insurers that are mutual benefit societies pursuant to chapter 432, Hawaii Revised Statutes, with less than five per cent of the health insurance market share offering contracts for dental and vision insurance as a condition, agreement, or understanding to the new health insurance policy or renewal of a health insurance policy under chapter 432;

     (2)  Making a clarifying change to ensure that the foregoing small insurers are exempt from only the anti-bundling provisions of section 431:13-103, Hawaii Revised Statutes, i.e., section 431:13-103(a)(4)(B); and thus, all the other unfair methods of competition and unfair or deceptive acts or practices in the business of insurance set forth in section 431:13-103, continue to apply to these insurers;

     (3)  Changing the effective date to encourage further discussions on the measure; and

     (4)  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. 2314, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2314, 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