Honolulu, Hawaii
                                                   , 1999

                                 RE: S.B. No. 822
                                     S.D. 2
                                     H.D. 1

Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii


     Your Committee on Consumer Protection and Commerce, to which
was referred S.B. No. 822, S.D. 2, entitled: 


begs leave to report as follows:

     The purpose of this bill is to require all health insurers,
mutual benefit societies, and heath maintenance organizations to
provide coverage for contraceptive services and supplies, while
authorizing an exemption for religious employers.

     Testimony in support of the bill was received from the
Department of Health (DOH), Hawaii State Commission on the Status
of Women, Family Planning Centers of Hawaii, American Civil
Liberties Union of Hawai'i (ACLU), Hawai'i Lawyers Care, and
Hawaii Government Employees Association.

     The Department of Commerce and Consumer Affairs supported
additional benefits to consumers provided there is no significant
increase in cost.  Kaiser Permanente supported the intent of the
bill and supported amendments proposed by Hawaii Medical Services
Association (HMSA).  HMSA commented on the bill and proposed

     Testimony opposing the bill was submitted by Liberty House,
Outrigger Enterprises, Inc., and the National Federation of
Independent Businesses.

                                 STAND. COM. REP. NO. 1429
                                 Page 2

     ACLU testified that the constitutional "right of privacy"
encompasses decisions about intimate personal matters such as
whether and when to bear a child, and that for that right to be
meaningful, the ability to obtain and use contraceptives is
critical.  DOH testified that contraceptive coverage is a
fundamental part of basic health care, allowing families to delay
and/or adequately space pregnancies, and improving maternal and
child health by decreasing incidences of abortion, infant
mortality, and poor child health and development.  DOH stated
that there is widespread agreement in the public health field
that coverage of contraceptive services and methods is cost-
effective, with each dollar spent on contraception saving $4 to
$14 in other medical and social costs.  Currently in Hawaii, lack
of contraceptive coverage is one of the main reasons that women
of reproductive age spend 68 percent more than men on out-of-
pocket health care costs.  DOH also testified that employers
benefit by the coverage in a decrease in sick days and maternity
and family leave.

     Those opposed to this measure testified that Hawaii's
mandated employee health care law that restricts employee premium
contributions to 1.5 percent of wages, burdens employers, and
that additional coverage would increase that burden and may
eventually contribute to the failure of businesses.

     When your Committee heard the House companion to this bill
earlier this session, your Committee found that the testifiers,
including a number of representatives of religious organizations,
were polarized.  Your Committee notes that these groups have
increasingly been able to resolve their differences, although a
number of disagreements still remain.  The progress made by these
groups is reflected in the amendments that your Committee has
made to this measure, to:

     (1)  Reshape the exemption for religious employers to
          address concerns of educational and other religious
          institutions, by removing the requirement that the
          inculcation of religious values be the religious
          employer's "primary" function;

     (2)  Add contraceptive supplies to the coverage from which a
          religious employer may request an exemption;

     (3)  Remove the requirement that the religious employer
          receive no public funding in order to invoke the

     (4)  Recognize the cost impact concerns of HMSA, by allowing
          providers to negotiate drug coverage with suppliers and

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                                 Page 3

          thereby reduce costs, by allowing coverage restricted
          to a limited contraceptive formulary, where a member
          may receive any other contraceptive only if the member
          has had adverse reactions to drugs within the formulary
          and the prescribing provider believes that their use
          would result in an adverse drug reaction; and

     (5)  Require that the Legislative Reference Bureau review
          the provision of contraceptive services and supplies
          coverage under employer health plans to determine
          whether mandated contraceptive coverage has increased
          the cost of health insurance, and report its findings
          to the Legislature no later than twenty days prior to
          the convening of the _____ legislative session; and

     Your Committee is pleased to note that as a result of
adopting HMSA's suggested amendment limiting the contraceptive
formulary, significant cost impacts on employers have been
removed and the law has become budget neutral with regard to
HMSA's employer members.

     In addition, your Committee notes that removal of the term
"primary" from the religious employer exemption reflects ongoing
dialog, and the exemption does not yet resolve all concerns of
the parties.  Your Committee also understands that due to time
limitations Kaiser's concerns regarding provisions of the bill
requiring that health plans provide a rider for contraceptive
coverage, were not addressed in these amendments.  For these
reasons, and to facilitate further discussion and progress on
resolving the issues raised by this measure, your Committee has
delayed the effective date of this bill to July 1, 2010.  Your
Committee has also made technical, nonsubstantive amendments for
purposes of style and clarity.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee is in accord with the intent and
purpose of S.B. No. 822, S.D. 2, as amended herein, and
recommends that it pass Second Reading in the form attached
hereto as S.B. No. 822, S.D. 2, H.D. 1, and be referred to the
Committee on Finance.

                                 STAND. COM. REP. NO. 1429
                                 Page 4

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

                                   RON MENOR, Chair