Report Title:

PEHF; Contributions Cap; Appropriation; Collective Bargaining

 

Description:

Limits state and county contributions to public employees health fund by amount appropriated annually, or to the amount agreed to under collective bargaining, if collective bargaining of benefits is approved in the future.

 

HOUSE OF REPRESENTATIVES

H.B. NO.

1058

TWENTY-FIRST LEGISLATURE, 2001

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to the public employees health fund.

 

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

SECTION 1. The legislature finds that the State and the counties face an unfunded liability for payment of health benefits for their public employees of a high of $24.8 billion for 2013, as projected by the auditor in its 1999 Actuarial Study and Operational Audit of the Hawaii Public Employees Health Fund. Low and intermediate estimates are not much lower and range from $7.9 billion to $11.4 billion. As of 1998, the unfunded liability for the public employees health fund has already reached a high of $7.4 billion, with low and intermediate projections of $3.6 billion and $4.5 billion.

Currently, the system of providing health benefits to public employees operates by paying for certain statutorily specified benefits, regardless of the cost. In the past, when health care costs were minimal and health benefits were not considered a significant component of a worker's compensation, this was not an issue. However, as more advanced treatment, procedures, and medications are developed, their costs have also increased. Health benefits are now considered an extremely important part of a worker's compensation precisely because health care now costs so much. In addition, as more workers begin to live longer and as they learn to demand to use more benefits, the system is proving unable to keep up. The reality is that the State, and the counties, will be unable to pay for health benefits for their employees in the future without seriously cutting from other portions of governmental budgets if no changes are made.

The purpose of this Act is to institute a de facto ceiling on public expenditures for health benefits for public employees by limiting the provision of benefits to appropriations made. Given a definite budget within which to work, the public employees health fund will be given flexibility to provide health benefits to public employees. If the legislature should allow benefit levels and type of benefits to be subject to collective bargaining, the public employees health fund would be subject to and limited by either legislative appropriations or collective bargaining, whichever is appropriate.

SECTION 2. Section 87-4, Hawaii Revised Statutes, is amended by amending subsections (a), (b), and (c) to read as follows:

"(a) [The] Subject to and as limited by legislative appropriations, the State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a monthly contribution for the cost of a health benefits plan. As employer, with regard to payment of its share of the monthly cost of a health benefits plan, the State and the counties shall pay to the fund, subject to legislative appropriations, a monthly amount equal to the amount established under chapter 89C or specified in the applicable public sector collective bargaining agreement, whichever is appropriate, for each of their respective employee-beneficiaries and employee-beneficiaries with dependent-beneficiaries, which shall be used toward the payment of costs of a health benefits plan; provided that the monthly contribution shall not exceed the actual cost of a health benefits plan. The State and the several counties shall be subject to and be limited by collective bargaining agreements, if permitted by law, or to legislative appropriations, whichever is appropriate, in their payments of monthly contributions to the fund under this subsection. If both husband and wife are employee-beneficiaries, the total contribution by the State or the appropriate county shall not exceed the monthly contribution of a family plan for both of them. If, however, the State or any of the several counties establish cafeteria plans in accordance with section 125 of the Internal Revenue Code of 1986, as amended, and part II of chapter 78, the monthly contribution to the fund for those employee-beneficiaries who participate in a cafeteria plan shall be made through the cafeteria plan. In this event, the payments made by the State or the counties shall include the State's and the counties' respective contributions to the fund and the employee-beneficiary's share of the cost of the health benefits plan selected and authorized by the employee-beneficiary through the cafeteria plan.

(b) [The] Subject to and as limited by legislative appropriations, the State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a monthly contribution for each child who has not attained the age of nineteen of all employee-beneficiaries who are enrolled for dental benefits. As employer, with regard to payment of its share of the monthly cost of a dental plan, the State and the counties shall pay to the fund, subject to legislative appropriations, a monthly amount equal to the amount established under chapter 89C or specified in the applicable public sector collective bargaining agreement, whichever is appropriate[, for each child who has not attained the age of nineteen of all employee-beneficiaries who are enrolled for dental benefits]. The contributions shall be used towards the payment of costs of dental benefits of a health benefits plan. Notwithstanding any provisions to the contrary, no part of the fund shall be used to finance the contributions except a rate credit or reimbursement or earnings or interest therefrom received by the fund or general revenues appropriated for that purpose. The State and the several counties shall be subject to and be limited by collective bargaining agreements, if permitted by law, or to legislative appropriations, whichever is appropriate, in their payments of monthly contributions to the fund under this subsection.

(c) [The] Subject to and as limited by legislative appropriations, the State through the department of budget and finance and the several counties through their respective departments of finance shall pay to the fund a monthly contribution equal to the amount established under chapter 89C or specified in the applicable public sector collective bargaining agreement, whichever is applicable, for each of their respective employees, to be used towards the payment of group life insurance benefits for each employee."

SECTION 3. Section 87-22, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) [The] Subject to and as limited by legislative appropriations, the board of trustees shall determine the health benefits plan or plans, which shall be excepted from the minimum group requirements of chapter 431. The health benefits plan or plans shall provide, pay for, arrange for, or reimburse the cost of hospitalization, surgery, medical, dental treatment, and care, and may include prescribed drugs, medicines, prosthetic appliances, hospital in-patient and out-patient service benefits, vision treatment and care, medical, and dental benefits. The board of trustees shall be subject to and be limited by collective bargaining agreements, if permitted by law, or to legislative appropriations, whichever is appropriate, in determining the health benefits plan."

SECTION 4. Section 87-22.3, Hawaii Revised Statutes, is amended to read as follows:

"87-22.3 Determination of health benefits plans. This section shall be subject to and limited by legislative appropriations or, if permitted by law, by collective bargaining agreements, whichever is appropriate. Pursuant to section 87-4, the board of trustees shall provide health benefits to employee-beneficiaries in the following manner:

(1) For those employee-beneficiaries who are not participating in a health benefits plan of an employee organization (hereafter "nonparticipating employee-beneficiaries"), the board of trustees shall establish health benefits plans and the requirements for eligibility under the health benefits plans. Any rate credit or reimbursement from any carrier derived from employee-beneficiary rate contributions to health benefits plans of nonparticipating employee-beneficiaries or interest derived therefrom may be used to improve the respective health benefits plans of nonparticipating employee-beneficiaries or to reduce the employee-beneficiary's respective share of monthly contributions to a health plan; or

(2) For employee-beneficiaries who participate in the health benefits plan of an employee organization, the board of trustees shall pay a monthly contribution for each employee-beneficiary, in the amount provided in section 87-4(a), or the actual monthly cost of the coverage, whichever is less, towards the purchase of health benefits under the health benefits plan of an employee organization."

SECTION 5. Section 87-22.5, Hawaii Revised Statutes, is amended to read as follows:

"87-22.5 Determination of dental plan benefits. This section shall be subject to and limited by legislative appropriations or, if permitted by law, by collective bargaining agreements, whichever is appropriate. Pursuant to section 87-4, the board of trustees shall provide dental plan benefits to the children of employee-beneficiaries who have not attained the age of nineteen in the following manner:

(1) For those children of employee-beneficiaries who are not participating in a dental program of an employee organization (hereafter called "nonparticipating employee-beneficiaries"), the board shall determine a dental plan and eligibility requirements for such benefits based upon a statutory monthly contribution per enrolled child;

(2) For those children of employee-beneficiaries who participate in the dental program of an employee organization, the board shall allot the statutory monthly contribution per enrolled child or the actual monthly cost of the child's coverage, whichever is less, towards the purchase of dental plan benefits under the dental program of an employee organization; provided that no enrolled child shall have more than one allotment a month; or

(3) Paragraphs (1) and (2) notwithstanding, an employee-beneficiary shall be required to enroll all of the employee-beneficiary's children who are under the age of nineteen in the children's dental plan for nonparticipating employee-beneficiaries or the dental program of an employee organization."

SECTION 6. Section 87-23, Hawaii Revised Statutes, is amended to read as follows:

"87-23 Determination of benefits under the group life benefit program or group life insurance program. This section shall be subject to and limited by legislative appropriations or, if permitted by law, by collective bargaining agreements, whichever is appropriate. Pursuant to section 87-4, the board of trustees shall provide benefits under a group life benefit program or group life insurance program to employees in the following manner:

(1) For those employees who are not participating in a group life benefit program or group life insurance program of an employee organization (hereafter "nonparticipating employees"), the board shall determine a group life insurance benefit plan and eligibility requirements for such benefits based upon the amount to be contributed per employee under section 87-4(c);

(2) For those employees who participate in a group life benefit program or group life insurance program of an employee organization, the board shall pay a monthly contribution for each employee, in the amount determined under section 87-4(c), or the actual monthly cost of the coverage, whichever is less, towards the purchase of benefits under the group life benefit program or group life insurance program of an employee organization; or

(3) Paragraphs (1) and (2) notwithstanding, an employee who is participating in a group life benefit program or group life insurance program of an employee organization may continue such plan and pay all of the premiums required while enrolled under paragraph (1); provided that no employee shall have more than one contribution from the board per month."

SECTION 7. Section 87-27, Hawaii Revised Statutes, is amended to read as follows:

"87-27 Supplemental plan to federal Medicare. This section shall be subject to and limited by legislative appropriations or, if permitted by law, by collective bargaining agreements, whichever is appropriate. Any other provision of this chapter notwithstanding, the board of trustees shall establish, effective July 1, 1966, a health benefits plan which takes into account benefits available to an employee-beneficiary and spouse under the federal Medicare plan, subject to the following conditions:

(1) There shall be no duplication of benefits payable under federal Medicare but the plan so established by the board shall be supplemental to the federal Medicare plan;

(2) The contribution for voluntary medical insurance coverage under federal Medicare may be paid by the fund, in such manner and in an amount as the board shall specify, in the case of an employee-beneficiary who is a retired employee, and spouse while the employee-beneficiary is living, including members of the old pension system and after death the employee-beneficiary's spouse provided the spouse qualifies as an employee-beneficiary; provided that the counties, through their respective departments of finance, shall reimburse the fund for any contributions made for county employee- beneficiaries under this paragraph;

(3) The benefits available under the plan, when taken together with the benefits available under the federal Medicare plan, as nearly as is possible, shall approximate the benefits available under the plans set forth in section 87-22. If, for any reason, a situation develops where the benefits available under the supplemental plan and the federal Medicare plan substantially differ from those that would otherwise be available, the board may correct this inequity to assure substantial equality of benefits;

(4) Notwithstanding any other law to the contrary, all employee-beneficiaries or dependent-beneficiaries who are eligible to enroll in the federal Medicare Part B medical insurance plan shall enroll in that federal plan as a requirement to receive the contributions and to participate in the employee benefit plans described in this chapter. This paragraph shall pertain to retired employees and their spouses and the surviving spouses of deceased retirees and employees killed in the performance of duty; and

(5) The board of trustees shall determine which employee-beneficiaries and dependent-beneficiaries, who are not enrolled in the federal Medicare Part B medical insurance plan, may participate in such other plans as are set forth in section 87-22."

SECTION 8. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 9. This Act shall take effect on July 1, 2001.

INTRODUCED BY:

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