Honolulu, Hawaii

, 2002

RE: S.B. No. 2871

S.D. 2



Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2002

State of Hawaii


Your Committee on Ways and Means, to which was referred S.B. No. 2871, S.D. 1, entitled:


begs leave to report as follows:

The purpose of this measure is to require health insurers, health maintenance organizations, and mutual benefit societies providing health insurance coverage that claim income and general excise tax exemptions to submit timely annual financial reports to the Department of Taxation.

The measure also requires the Auditor to conduct regular audits of all companies within the health care industry.

Your Committee believes that the State must carefully oversee entities providing health care insurance in Hawaii. Therefore, it is appropriate to require health care providers claiming tax exemptions to provide annual financial reports to the Department of Taxation.

Upon further consideration, your Committee has amended this measure by:

(1) Changing the reference to the Public Employees Health Fund to the "Hawaii employer-union health benefits trust fund" in section 23-4(c) on page 2, line 12, because the Public Employees Health Fund is repealed on July 1, 2003;

(2) Replacing the incorrect phrase "insurer or health maintenance organization" with "mutual benefit society" in section 432:1-403(b) on page 8, lines 5-6;

(3) Replacing the clause "any other entity offering or providing health benefits or services under the regulation of the insurance commissioner" with the phrase "mutual benefit society under chapter 432" in section 235-9(b) on page 3, lines 13-15, and in section 237-29.7(b) on page 5, lines 11-13; and

(4) Adding "mutual benefit society" or similar phrase to "insurer or health maintenance organization" or similar phrase to sections 235-9 and 237-29.7, Hawaii Revised Statutes.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2871, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2871, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,