STAND. COM. REP. NO. 3091

Honolulu, Hawaii

RE:    S.C.R. No. 108

Honorable Shan S. Tsutsui

President of the Senate

Twenty-Sixth State Legislature

Regular Session of 2012

State of Hawaii

Sir:

     Your Committee on Commerce and Consumer Protection, to which was referred S.C.R. No. 108 entitled:

"SENATE CONCURRENT RESOLUTION REQUESTING THE INSURANCE COMMISSIONER TO REVIEW THE ACCUMULATION OF CAPITAL RESERVES AND SURPLUS OF MANAGED CARE PLANS WHEN REVIEWING RATE FILINGS,"

begs leave to report as follows:

     The purpose and intent of this measure is to request the Insurance Commissioner to review the accumulation of capital reserves and surplus of managed care plans when reviewing rate filings.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs and one individual.

     Your Committee finds that managed care plans in Hawaii need monetary reserves to cover unanticipated claims and unforeseen business fluctuations, but the accrual of excessive amounts of reserves may result in managed care plan subscribers paying a higher premium rate than is justified.  Your Committee further finds that an effective rate review system under the Patient Protection and Affordable Care Act requires consideration of capital reserves and surplus of managed care plans.  This measure requests the Insurance Commissioner to consider the accumulation of capital reserves and surplus of managed care plans when reviewing rate filings and to submit a report and proposed legislation to enable the Insurance Commissioner to make these considerations when reviewing rate filings.

     As affirmed by the record of votes of the members of your Committee on Commerce and Consumer Protection that is attached to this report, your Committee concurs with the intent and purpose of S.C.R. No. 108 and recommends that it be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Commerce and Consumer Protection,

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ROSALYN H. BAKER, Chair