STAND. COM. REP. NO. 2506

Honolulu, Hawaii

RE:    S.B. No. 2530

       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. 2530 entitled:

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

begs leave to report as follows:

     The purpose of this measure is to require group health issuers to offer small group health plans to self-employed individuals who are licensed by the Department of Commerce and Consumer Affairs and are located in the group health issuer's service areas.

     This measure also allows limits on timing of enrollment and reenrollment to control adverse selection and plan costs.

     Testimony in support of the measure was submitted by the Department of Commerce and Consumer Affairs, the Hawaii Association of Realtors, Kaiser Permanente, and the National Federation of Independent Business.  Comments on the measure were also submitted by the Hawaii Medical Service Association.

     Your Committee finds that health insurance coverage is an extremely important, although often expensive, necessity for individuals in our communities.  Although the Hawaii Prepaid Health Care Act provides for healthcare insurance for many residents in the State, there are still a large, growing number of individuals who are without such coverage, due to cost, the nature of their work, or lack of eligibility for other reasons.  This measure extends health insurance coverage to self-employed individuals who work or reside within a group health issuer's service area, unless the group health issuer is determined to lack adequate capacity for such enrollment.  Your Committee determines that requiring group health issuers to provide such coverage will help to reduce the number of uninsured individuals, comprised largely of self-employed individuals.

     Your Committee received testimony raising a concern with requiring group health insurers to offer all small group health plans to self-employed individuals, while the law authorizes the offering of only one small group health plan to small employers who employ only one employee.  Your Committee finds that equitable treatment is warranted through the grant of discretionary authority by the Insurance Commissioner.

     Accordingly, your Committee has amended this measure by:

     (1)  Authorizing, rather than requiring, the Insurance Commissioner to exempt group health plans offered to small employers that employ only one employee if such plan satisfies the requirements of chapter 393, Hawaii Revised Statutes, and upon determination by the Insurance Commissioner as to the adequacy of the insurer's capacity; and

     (2)  Making a technical, nonsubstantive change for purposes of clarity and to reflect preferred drafting 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. 2530, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 2530, 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