HB2529.DOC

SECTION 1. The Hawaii health insurance exchange, known as the Hawaii health connector, was established in 2011 to ensure the State's compliance with the federal Patient Protection and Affordable Care Act of 2010. The federal law allows for the establishment of state health insurance exchanges through which qualified individuals and small employers can purchase private health insurance from an array of affordable, comprehensive health insurance plans. Act 205, Session Laws of Hawaii 2011, established the Hawaii health connector as a private nonprofit organization independent from state government rather than a state agency.

Federal law creates a framework for the state health insurance exchanges. The Patient Protection and Affordable Care Act of 2010 sets minimum structural and operational standards for states in establishing their health insurance exchanges. States have broad discretion in establishing the structure and governance of their exchanges. The federal law relies on the states to make critical choices in the structure and operations of their respective exchanges.

The legislature finds that evolving federal health care regulations and the need for greater transparency and oversight over Hawaii's health insurance exchange necessitate that the State revise the structure of the Hawaii health connector.

The purpose of this Act is to provide greater transparency and oversight over Hawaii's health insurance exchange by:

(1) Creating a consumer, patient, business, and health care advisory group and an intergovernmental agency advisory group to provide input and recommendations to the board of directors of the Hawaii health connector;

(2) Establishing the Hawaii health connector as a state entity; and

(3) Making changes to the composition of the board of directors of the Hawaii health connector.

SECTION 2. Chapter 435H, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§435H- Consumer, patient, business, and health care advisory group. The board of directors of the Hawaii health connector shall establish a consumer, patient, business, and health care advisory group to provide input and recommendations to the board. The advisory group shall reflect geographic diversity and diversity of interests. Members shall include individuals with education, training, or professional experience in the fields of consumer advocacy, patient advocacy, public health, health care provision, economics, health insurance, financial management, risk management, and small business. Members of the advisory group shall serve in an advisory capacity only and shall not be considered state employees for any purpose. Members shall not be compensated but shall be reimbursed for necessary expenses incurred in the performance of their duties.

§435H- Intergovernmental agency advisory group. There is established an intergovernmental agency advisory group that shall serve in an advisory capacity to provide input and recommendations to the board. The advisory group shall consist of the following members:

(1) The director of commerce and consumer affairs;

(2) The director of health; and

(3) The director of labor and industrial relations.

The governor shall designate one member to convene and serve as the chair of the advisory group."

SECTION 3. Section 435H-2, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) There is established within the department of commerce and consumer affairs the Hawaii health insurance exchange to be known as the Hawaii health connector. The connector shall [~~not~~] be a public body corporate and politic and an instrumentality and agency of the State [and shall not be subject to laws or rules regulating rulemaking, public employment, or public procurement. The connector shall be a Hawaii nonprofit corporation organized and governed pursuant to chapter 414D, the Hawaii nonprofit corporations act.] except that the debts and liabilities of the connector shall not constitute the debts and liabilities of the State."

SECTION 4. Section 435H-4, Hawaii Revised Statutes, is amended to read as follows:

"§435H-4 Board of directors; composition; operation. (a) The Hawaii health connector shall be [~~a nonprofit entity~~] governed by a board of directors that shall comprise [~~fifteen~~] nine voting members as follows:

(1) The insurance commissioner;

(2) The director of human services;

(3) The healthcare transformation coordinator;

(4) Two members who shall be appointed by the governor [and with the advice and consent of the senate pursuant to section 26‑34; provided that the governor shall submit nominations to the senate for advice and consent no later than February 1, 2012; and provided further that the senate shall timely advise and consent to nominations for terms to begin July 1, 2012. Members of the interim board shall be eligible for appointment to the board.];

(5) Two members who shall be appointed by the president of the senate; and

(6) Two members who shall be appointed by the speaker of the house of representatives.

The board shall elect one of its members as the chair of the board. The board, by majority vote, may remove or suspend for cause any member after due notice and public hearing.

(b) The membership of the board shall reflect geographic diversity and the diverse interests of stakeholders including consumers[,] and employers[~~, insurers, and dental benefit providers~~]. Each person appointed to the board shall have education, training, or professional experience in at least one of the following areas:

(1) Health care policy;

(2) Health benefits plan administration, including medicaid administration;

(3) Health insurance;

(4) Health care financing and purchasing;

(5) Health care delivery;

(6) Information technology; or

(7) Economics and actuarial science.

In making appointments, the appointing authorities shall consider the background and expertise of all members of the board and the geographic, socioeconomic, and other characteristics of the State, so that the board's composition reflects a diversity of expertise, skills, and background relevant to the State.

[The director of commerce and consumer affairs or the director's designee, the director of health or the director's designee, the director of human services or the director's designee, and the director of labor and industrial relations or the director's designee shall be ex officio, voting members of the board.

The director of commerce and consumer affairs, the director of health, the director of human services, and the director of labor and industrial relations may select a designee for a specified meeting or meetings. Such selection of the designee shall be submitted in writing to the board of directors prior to or at the meeting in which the designee will serve.]

(c) Board members shall serve staggered terms [~~and the interim board shall recommend an appropriate schedule for staggered terms;~~] of four years each, provided that [~~this~~] the terms of the initial appointments of members pursuant to Act , Session Laws of Hawaii 2014, shall be as follows:

(1) One member appointed by each appointing authority shall be appointed for two years; and

(2) One member appointed by each appointing authority shall be appointed for four years.

This subsection shall not apply to ex officio members, who shall serve during their entire term of office.

(d) Any vacancy on the board shall be filled for the remainder of the unexpired term in the same manner as the original appointment as specified in subsection (a). Any member whose term has expired and who is not disqualified from membership may continue in office until a successor is appointed.

[~~(d)~~] (e) The board shall adopt policies prohibiting conflicts of interest and procedures for recusal of a member in the case of an actual or potential conflict of interest, including policies prohibiting a member from taking part in official action on any matter in which the member had any financial involvement or interest prior to the commencement of service on the board. Members of the board may retain private counsel for matters relating to service on the board according to rules recommended by the board.

[~~(e)~~] (f) The board shall manage the budget of the connector according to generally accepted accounting principles and a plan for financial organization adopted by the legislature based on recommendations of the interim board.

[~~(f)~~] (g) The board shall maintain transparency of board actions, including public disclosure and posting of board minutes on the connector's website according to provisions adopted by the legislature based on recommendations of the interim board."

SECTION 5. The director of commerce and consumer affairs shall work with the board of directors of the Hawaii health connector as constituted pursuant to Act 205, Session Laws of Hawaii 2011, in order to effectuate a seamless transition of duties, functions, and records to the amended governance structure of the Hawaii health connector as required by this Act. Transition procedures shall ensure that no interruption occurs in the provision of health coverage or health care services to any individual or business served by or eligible for service through the Hawaii health connector.

Planning and coordination for the transition of the duties, functions, and records of the Hawaii health connector as constituted pursuant to Act 205, Session Laws of Hawaii 2011, to the amended governance structure of the Hawaii health connector as provided by this Act shall be completed in a timely manner in order for the amended governance structure established by this Act to take effect on January 1, 2016.

SECTION 6. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval; provided that that sections 2, 3, and 4 shall take effect on January 1, 2016.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2529
TWENTY-SEVENTH LEGISLATURE, 2014
STATE OF HAWAII