REPORT TITLE:
Long-Term Care Insurance


DESCRIPTION:  Directs joint legislative committee (JLC) to hold
hearings and to report to legislature on issues including
adoption of July 1998 NAIC Long-Term Care Insurance Model Act and
Model Regulation.  Makes appropriation for LTC actuarial study;
makes appropriation for insurance division to hire LTC actuary;
extends sunset date of JLC.  Makes appropriation for managed
long-term care demonstration project.  (SB131 HD2)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        131
THE SENATE                              S.B. NO.           S.D. 3
TWENTIETH LEGISLATURE, 1999                                H.D. 2
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO LONG-TERM CARE.



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

 1                              PURPOSE
 
 2      SECTION 1  Long-term care is an issue of immense importance.
 
 3 Providing adequate care for the aged and disabled is an economic
 
 4 burden for many people.  The legislature finds that long-term
 
 5 care insurance policies offer a means of alleviating that burden.
 
 6 The legislature believes that the State should encourage the
 
 7 offering of long-term care insurance to provide a modicum of
 
 8 financial security.  
 
 9      The purpose of this Act is to establish mechanisms for
 
10 studying and evaluating significant issues relating to long-term
 
11 care, including the following issues:
 
12      (1)  Adoption of the July 1998 National Association of
 
13           Insurance Commissioners (NAIC) Long-Term Care Insurance
 
14           Model Act and Model Regulation;
 
15      (2)  Compliance with the Health Insurance Portability and
 
16           Accountability Act of 1996 (HIPAA);
 
17      (3)  Preemption of employer mandate provisions by the
 
18           Employee Retirement Income Security Act of 1974
 
19           (ERISA);
 

 
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 1      (4)  Determination of appropriate and affordable universal
 
 2           long-term care financing; and
 
 3      (5)  Alternative ways to provide long-term care.
 
 4                              PART I
 
 5               STUDY BY JOINT LEGISLATIVE COMMITTEE
 
 6      SECTION 2.  The legislature finds that the long-term care
 
 7 insurance provisions contained in part V of chapter 431:10A,
 
 8 Hawaii Revised Statutes (HRS), were adopted in 1989 and have not
 
 9 been significantly updated since 1991.  The legislature further
 
10 finds that while the State currently applies the provisions of
 
11 the Health Insurance Portability and Accountability Act of 1996,
 
12 P.L. 104-191 (HIPAA), as it relates to group and individual
 
13 health insurance, to title 24 as provided in section 431:2-201.5,
 
14 HRS, the State has never specifically adopted the consumer
 
15 protection provisions for qualified long-term care insurance
 
16 contracts which are set forth in the HIPAA.  The legislature
 
17 believes that compliance with these HIPAA consumer protection
 
18 provisions is necessary to qualify amounts paid for premiums on
 
19 new long-term care insurance policies for a federal income tax
 
20 deduction.  The legislature further believes that the consumer
 
21 protection provisions of the July 1998 NAIC Long-Term Care
 
22 Insurance Model Act and Model Regulation will comply with the
 
23 consumer protection requirements of the HIPAA and should be
 

 
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 1 adopted in order to allow the insurance commissioner to better
 
 2 protect the purchasers of new long-term care insurance policies
 
 3 in this State.
 
 4      The joint legislative committee on long-term care,
 
 5 established by Act 339, Session Laws of Hawaii 1997, in
 
 6 consultation with the insurance commissioner, shall:
 
 7      (1)  Conduct hearings on the adoption of the July 1998 NAIC
 
 8           Long-Term Care Insurance Model Act and Model
 
 9           Regulation, and on other issues including HIPAA
 
10           compliance and ERISA preemption of employer mandate
 
11           provisions; and
 
12      (2)  Submit a report of its findings and its recommendations
 
13           for proposed legislation to the legislature no later
 
14           than twenty days prior to the convening of the regular
 
15           session of 2000. 
 
16                              PART II
 
17          JOINT LEGISLATIVE COMMITTEE REPORTS AND SUNSET
 
18      SECTION 3.  Act 339, Session Laws of Hawaii 1997, is amended
 
19 by amending section 4 to read as follows:
 
20      "SECTION 4.  The joint legislative committee shall submit
 
21 [a] an interim report of its findings and recommendations to the
 
22 legislature by December 1, 1998[.], and a final report by
 
23 December 30, 1999.  The joint legislative committee shall cease
 

 
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 1 to exist on June 30, [1999.] 2000."
 
 2                             PART III
 
 3                        REGULATORY FUNDING
 
 4      SECTION 4.  There is appropriated out of the general
 
 5 revenues of the State of Hawaii the sum of $          or so much
 
 6 thereof as may be necessary for fiscal year 1999-2000 for the
 
 7 insurance division to hire a qualified long-term care insurance
 
 8 actuary and to increase its staff to enable it to adequately
 
 9 review long-term care insurance filings.
 
10      SECTION 5.  The sum appropriated under section 4 shall be
 
11 expended by the department of commerce and consumer affairs for
 
12 the purposes of this part.
 
13                              PART IV
 
14                          ACTUARIAL STUDY
 
15      SECTION 6.  The legislature finds that comprehensive
 
16 information and analysis is needed by the State to determine an
 
17 appropriate, adequate, and affordable universal long-term care
 
18 financing program, including but not limited to:
 
19      (1)  Reliance upon private insurance, creation of a public
 
20           trust fund, or creation of a quasi-public state entity,
 
21           or a combination of these; and
 
22      (2)  Funding mechanisms, such as tax or insurance premiums,
 
23           and the amounts thereof.
 

 
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 1      The legislature believes that a comprehensive actuarial
 
 2 study and analysis should include marketing data and mechanisms
 
 3 of the entire population of the State, including private sector
 
 4 employees, government employees, all age groups, and the
 
 5 disabled, for purposes of making recommendations to structure
 
 6 such a program.  The actuarial study and analysis also should
 
 7 consider the report of the joint legislative committee on long-
 
 8 term care, dated December 1, 1998, and the report "Financing Long
 
 9 Term Care, A Report to the Hawaii State Legislature" of the
 
10 executive office on aging dated January 1991, and its related
 
11 actuarial report, in making the actuaries' findings and
 
12 recommendations.
 
13      The legislature further believes that the governor should
 
14 expend $150,000 to commission the actuarial study from funds
 
15 appropriated to the Hawaii public employees health fund for
 
16 fiscal year 1998-1999 (Act 116, Session Laws of Hawaii 1998,
 
17 BUF 142) and other available funds under the jurisdiction of the
 
18 insurance division.  If the governor does not expend those funds
 
19 or does not initiate the actuarial study, the legislature
 
20 recommends that the actuarial study be commissioned by the joint
 
21 legislative committee on long-term care.
 
22      SECTION 7.  There is appropriated out of the general
 
23 revenues of the State of Hawaii the sum of $300,000, or so much
 

 
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 1 there of as may be necessary for fiscal year 1999-2000, to hire
 
 2 or contract with a qualified long-term care actuarial firm for
 
 3 the purposes of commissioning a comprehensive actuarial study and
 
 4 analysis.
 
 5      SECTION 8.  The sum appropriated under section 7 shall be
 
 6 expended by the joint legislative committee on long-term care,
 
 7 established by Act 339, Session Laws of Hawaii 1997; provided
 
 8 that the sum appropriated shall be expended only if the office of
 
 9 the governor does not expend those funds described under section
 
10 6, or so much thereof as may be necessary, or otherwise does not
 
11 initiate a comprehensive actuarial study and analysis on long-
 
12 term care, by June 30, 1999.
 
13      SECTION 9.  The actuarial report shall be submitted not
 
14 later than November 1, 1999, to the office of the governor, the
 
15 senate, and the house of representatives.  The joint legislative
 
16 committee on long-term care, established by Act 339, Session Laws
 
17 of Hawaii 1997, shall conduct hearings on the actuarial report in
 
18 time for a legislative package of proposals to be submitted in
 
19 the regular session of 2000.
 
20      SECTION 10.  There is appropriated out of the general
 
21 revenues of the State of Hawaii the following sums, or so much
 
22 thereof as may be necessary, for fiscal year 1999-2000 for
 
23 expenses related to the joint legislative committee on long-term
 

 
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 1 care:
 
 2      House of Representatives          $30,000
 
 3      Senate                            $30,000
 
 4      The sums appropriated shall be expended by the house of
 
 5 representatives and the senate respectively, for the purposes of
 
 6 conducting statewide public briefings on the findings and
 
 7 recommendations of the comprehensive actuarial study undertaken
 
 8 pursuant to this Act.
 
 9                              PART V
 
10           MANAGED LONG-TERM CARE DEMONSTRATION PROJECT
 
11      SECTION 11.  The legislature finds that long-term care is a
 
12 critical issue of particular importance to Hawaii, where there is
 
13 a shortage of nursing home beds, and where home and
 
14 community-based programs are fragmented and non-existent in some
 
15 areas.  To address these growing concerns, the State needs to
 
16 examine alternative ways to administer long-term care, which will
 
17 minimize the need for new long-term care beds and control
 
18 ever-increasing costs, while providing a more favorable
 
19 environment for the State's elderly.
 
20      The legislature further finds that one viable option is the
 
21 non-institutional means of providing long-term care.
 
22 Establishing such a long-term care demonstration project will
 
23 offer Medicaid recipients the opportunity for home and
 

 
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 1 community-based services, and address the need to decrease the
 
 2 burden on the State, hospitals, nursing facilities, and the
 
 3 elderly and their families.
 
 4      The legislature believes that the State's MedQuest program
 
 5 has demonstrated that savings can be accomplished in an acute
 
 6 care Medicaid program by using managed care companies to deliver
 
 7 high quality care.  A comparable model for long-term care would
 
 8 be based on:
 
 9      (1)  Integration of home and community-based services, long-
 
10           term nursing facility care, and acute care systems;
 
11      (2)  Respect for the dignity of the elderly;
 
12      (3)  Integration of financing and delivery of services;
 
13      (4)  Consumer involvement in planning and monitoring; and
 
14      (5)  Improvements in the quality of care.
 
15      The 1998 legislature appropriated $40,000 to begin the
 
16 development of a managed long-term care demonstration project,
 
17 with matching funds of $40,000 to be provided by the federal
 
18 government.  Much remains to be done on this vital project.
 
19      The purpose of this part is to continue the design and
 
20 implementation of a managed long-term care demonstration project.
 
21      SECTION 12.  There is appropriated out of the general
 
22 revenues of the State the sum of $        , or so much thereof as
 
23 may be necessary for fiscal year 1999-2000, to establish a long-
 

 
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 1 term care managed care waiver; provided that the funds shall be
 
 2 used to:
 
 3      (1)  Review and update current information gathered to date
 
 4           on state Medicaid managed care programs for the
 
 5           provision of long-term care services; and
 
 6      (2)  Develop a planning document for the design and
 
 7           implementation of a Medicaid managed long-term care
 
 8           demonstration project, to include:
 
 9           (A)  Identification of preliminary resource needs;
 
10           (B)  Development of a workplan for the design and
 
11                implementation of a Medicaid managed long-term
 
12                care demonstration project; and
 
13           (C)  Development of a list of changes to current
 
14                infrastructure that may be necessary to
 
15                accommodate a Medicaid managed long-term care
 
16                demonstration project.
 
17      SECTION 13.  The sum appropriated in section 12 shall be
 
18 expended by the department of human services for the purposes of
 
19 this part.
 
20      SECTION 14.  The revisor of statutes is authorized by this
 
21 Act to designate numerical section references in lieu of
 
22 alphabetical references as contained in this Act and shall
 
23 accordingly designate the internal section references contained
 

 
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 1 in this Act. 
 
 2      SECTION 15.  Statutory material to be repealed is bracketed.
 
 3 New statutory material is underscored.
 
 4      SECTION 16.  This Act shall take effect _________________.