REPORT TITLE: 
Health Fund


DESCRIPTION:
Provides that the total employer contribution shall not exceed
the actual cost of a health benefits plan, including any
overpayment refunds.  Ensures that a public employer pays the
same percentage of the health benefits plan of an employee,
whether the employee participates in a health fund or union-
sponsored health benefits plan.  Clarifies that the board of
trustees of the health fund owes a fiduciary duty to the State
to ensure that the government contributors to the fund are
receiving a fair return for their contributions.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        
HOUSE OF REPRESENTATIVES                H.B. NO.359        
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            
                                                             
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                     A BILL FOR AN ACT

RELATING TO THE HAWAII PUBLIC EMPLOYEES HEALTH FUND.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1.  The legislature finds that Hawaii law allows
 
 2 eligible public employees and retirees to obtain health benefit
 
 3 coverage through union plans in lieu of the plans provided
 
 4 through the Hawaii public employees health fund (health fund).
 
 5 Hawaii may be the only state allowing both the health fund and
 
 6 unions to offer health insurance coverage to its public
 
 7 employees.
 
 8      One benefit of this situation is that Hawaii's state and
 
 9 county employees are given greater opportunities to choose the
 
10 health plan best suiting their needs.  However, it leads to an
 
11 atmosphere conducive to adverse selection.  It also allows
 
12 providers to choose the more desirable, low-risk individuals to
 
13 participate in their health plans.  In many cases, this leaves
 
14 the government health fund with the higher-cost or higher-risk
 
15 individuals.
 
16      The legislature finds that state law obligates the health
 
17 fund, for each type of union plan coverage elected by the
 
18 employee, to port the lesser of the public employer's monthly
 
19 contribution as specified in the collective bargaining agreement
 
20 or the actual monthly premium cost.  Because of this requirement,
 

 
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 1 the government contribution, which may be sixty per cent of the
 
 2 premium for the most popular health fund plan, represents a
 
 3 greater percentage of the less-costly union plan.  The problem is
 
 4 aggravated if a union plan gets a refund for the overpayment of
 
 5 premiums:  none of the refunded money goes back to the government
 
 6 employer paying the bulk of the premiums.
 
 7      It is the intent of the legislature that this Act rectify
 
 8 this inequity forcing the health fund to pay a greater percentage
 
 9 of health benefits for an employee participating in a union-
 
10 sponsored health plan.
 
11      The purpose of this Act is to:
 
12      (1)  Provide that total employer contributions shall not
 
13           exceed the actual cost of a health benefits plan,
 
14           including any overpayment refunds;
 
15      (2)  Ensure that a public employer pays the same percentage
 
16           of the health benefits plan of an employee, whether the
 
17           employee participates in a health fund or union-
 
18           sponsored health benefits plan; and
 
19      (3)  Clarify that the board of trustees of the health fund
 
20           owes a fiduciary duty to the State to ensure that the
 
21           employer contributors to the fund are receiving a fair
 
22           return for their contributions.
 

 
 
 
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                                     H.B. NO.359        
                                                        
                                                        

 
 1      SECTION 2.  Section 87-4, Hawaii Revised Statutes, is
 
 2 amended by amending subsection (a) to read as follows:
 
 3      "(a)  The State through the department of budget and finance
 
 4 and the several counties through their respective departments of
 
 5 finance shall pay to the fund a monthly contribution equal to the
 
 6 amount established under chapter 89C or specified in the
 
 7 applicable public sector collective bargaining agreement,
 
 8 whichever is appropriate, for each of their respective employee-
 
 9 beneficiaries and employee-beneficiaries with dependent-
 
10 beneficiaries, which shall be used toward the payment of costs of
 
11 a health benefits plan; provided that the [monthly contribution
 
12 shall not exceed the] total employer contribution shall not
 
13 exceed:
 
14      (1)  The actual cost of a health benefits plan[.], including
 
15           any overpayment refunds; and
 
16      (2)  For employer contributions to union-sponsored health
 
17           benefits plans, the State's or county's contribution
 
18           per employee-beneficiary and employee-beneficiary with
 
19           dependents shall be the same percentage paid by the
 
20           State or county on behalf of an employee-beneficiary
 
21           and employee-beneficiary with dependents for a state-
 
22           sponsored health benefits plan.
 

 
 
 
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                                     H.B. NO.359        
                                                        
                                                        

 
 1      If both husband and wife are employee-beneficiaries, the
 
 2 total contribution by the State or the appropriate county shall
 
 3 not exceed the monthly contribution of a family plan for both of
 
 4 them.  If, however, the State or any of the several counties
 
 5 establish cafeteria plans in accordance with section 125 of the
 
 6 Internal Revenue Code of 1986, as amended, and part II of chapter
 
 7 78, the monthly contribution to the fund for those employee-
 
 8 beneficiaries who participate in a cafeteria plan shall be made
 
 9 through the cafeteria plan.  In this event, the payments made by
 
10 the State or the counties shall include the State's and the
 
11 counties' respective contributions to the fund and the employee-
 
12 beneficiary's share of the cost of the health benefits plan
 
13 selected and authorized by the employee-beneficiary through the
 
14 cafeteria plan."
 
15      SECTION 3.  Section 87-21, Hawaii Revised Statutes, is
 
16 amended to read as follows:
 
17      "87-21  Administration of the fund.  The board [of
 
18 trustees] shall administer and carry out the purpose of the fund.
 
19 In carrying out the purposes of the fund, not only does the board
 
20 owe a fiduciary duty to the employee-beneficiaries and dependent-
 
21 beneficiaries, but the board also owes a fiduciary duty to the
 
22 State to ensure that the employer contributors to the fund are
 
23 receiving a fair return for their contributions."
 

 
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                                     H.B. NO.359        
                                                        
                                                        

 
 1      SECTION 4.  Statutory material to be repealed is bracketed.
 
 2 New statutory material is underscored.
 
 3      SECTION 5.  This Act shall take effect upon its approval.
 
 4 
 
 5                           INTRODUCED BY:_________________________