Report Title:

State Health Authority

Description:

Establishes the State Health Authority to provide health care for all Hawaii citizens. Establishes the State Health Authority Commission to determine the costs of the Authority, and to determine a financing mechanism to carry out the purpose of the Authority. Repeals the State Health Planning and Development Agency and transfers its functions to the Authority. (HB2876 HD1)

HOUSE OF REPRESENTATIVES

H.B. NO.

2876

TWENTY-SECOND LEGISLATURE, 2004

H.D. 1

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to health care.

 

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

SECTION 1. The cost of health care in Hawaii and the nation is escalating exponentially, and medicaid reimbursements are frequently less than the actual cost of care. Additionally, health insurance premium costs and prescription drug costs are rising rapidly.

In the wake of the recent nurses' strike in Honolulu, some of the State's largest hospitals stated that consumers and employers will likely pay more for labor costs through increased hospital fees, higher insurance premiums, and receive fewer services in return. In 2001, the Hawaii Medical Service Association raised their premium rates by approximately five per cent, while Kaiser raised their rates by just under nine per cent.

The increase in premium costs translates into increased employer costs. Under the Prepaid Health Care Act, private-sector employers are required to pay the bulk of health insurance premiums for their employees who work twenty hours or more per week. Public employees generally pay more than private-sector employees because the State of Hawaii is exempt from the Prepaid Health Care Act. The Prepaid Health Care Act does not require employers to provide health insurance coverage for employees working less than twenty hours per week. Increasing health insurance costs may lead to employers hiring individuals to work only part-time, or less than twenty hours per week, to avoid higher costs.

Another factor increasing health care costs is that better technology is used in the treatment of illnesses. New technology has greatly improved the quality of life for patients. However, better technology has resulted in increased costs. It is estimated that new technology is responsible for almost fifty per cent of the total increase in health care over the last thirty years.

While Hawaii was once known for having a low uninsured population, between two and five per cent in 1994, health agencies are now concerned with the growing number of uninsured individuals. The Healthcare Association of Hawaii estimates that the current rate of uninsured individuals is ten per cent.

The legislature believes that while the Prepaid Health Care Act served its purpose from its establishment to many years thereafter, it is now time to consider other options. Increasing health care costs, insurance premiums, employer costs, prescription drug costs, long-term care costs, together with the growing number of uninsured individuals, and inadequate medicaid reimbursements are creating a need for new and innovative legislation that will provide affordable health care for all of Hawaii's citizens.

A single payer system, where one entity covers all the health care for a specific population either directly or through contracts with insurers, is a viable option for the State to provide health care coverage for all citizens at an affordable cost. Canada has used a single payer system for the last twenty-five years. In relation to their respective economy, Canada and the United States spent the same proportion on health care costs. After implementing the single payer system, Canada's costs stabilized at nine per cent, while costs in the United States have increased to fourteen per cent. Canada's health care providers spend only one-tenth of what the United States providers do on overhead.

The purpose of this Act is to establish the state health authority to be responsible for the overall health planning for the state and to develop a plan to provide insurance for all Hawaii citizens.

SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"Chapter

HEALTH CARE FOR ALL HAWAII

-1 Definitions. As used in this chapter:

"Assisted living facility" means a combination of housing, health care services, and personalized support services designed to respond to individual needs, and to promote choice, responsibility, independence, privacy, dignity, and individuality. In this context, "health care services" means the provision of services in an assisted living facility that assists the resident in achieving and maintaining the highest state of positive well-being (i.e., psychological, social, physical, and spiritual) and functional status. This may include nursing assessment and monitoring, delegation of nursing tasks by registered nurses pursuant to chapter 457, care management, monitoring, records management, and arranging for or coordinating health and social services, or both.

"Authority" means the state health authority.

"Extended care adult residential care home" means an adult residential care home providing twenty-four-hour living accommodation for a fee, for adults unrelated to the licensee. The primary caregiver shall be qualified to provide care to nursing facility level individuals who have been admitted to a medicaid waiver program, or persons who pay for care from private funds and have been certified for this type of facility. There shall be two categories of extended care adult residential care homes, which shall be licensed in accordance with rules adopted by the department of health:

(1) Type I home shall consist of five or fewer unrelated persons with no more than two extended care adult residential care home residents; and

(2) Type II home shall consist of six or more unrelated persons and one or more persons may be extended care adult residential care home residents.

"Fund" means the state health authority fund.

"Health" includes physical and mental health.

"Health care facility" and "health care service" include any program, institution, place, building, or agency, or portion thereof, private or public, other than federal facilities or services, whether organized for profit or not, used, operated, or designed to provide medical diagnosis, treatment, nursing, rehabilitative, or preventive care to any person or persons. The terms include health care facilities and health care services commonly referred to as hospitals, extended care and rehabilitation centers, nursing homes, skilled nursing facilities, intermediate care facilities, hospices for the terminally ill that require licensure or certification by the department of health, kidney disease treatment centers, including freestanding hemodialysis units, outpatient clinics, organized ambulatory health care facilities, emergency care facilities and centers, home health agencies, health maintenance organizations, and others providing similarly organized services regardless of nomenclature.

"Health care provider" means a health care facility, physician, dentist licensed under chapter 448, chiropractor licensed under chapter 442, optometrist licensed under chapter 459, podiatrist licensed under chapter 463E, psychologist licensed under chapter 465, occupational therapist subject to chapter 457G, and physical therapist licensed under chapter 461J.

"Organized ambulatory health care facility" means a facility not part of a hospital, which is organized and operated to provide health services to outpatients. The authority may adopt rules to establish further criteria for differentiating between the private practice of medicine and organized ambulatory health care facilities.

"Panel" means the review panel on mandated health care service coverage.

"Physician" means a doctor of medicine or osteopathy who is legally authorized to practice medicine and surgery by the State.

"Primary care clinic" means a clinic for outpatient services providing all preventive and routine health care services, management of chronic diseases, consultation with specialists when necessary, and coordination of care across health care settings or multiple providers, or both. Primary care clinic providers include:

(1) General or family practice physicians;

(2) General internal medicine physicians;

(3) Pediatricians;

(4) Obstetricians and gynecologists;

(5) Physician assistants; and

(6) Advanced practice registered nurses.

-2 State health authority; establishment. (a) There is established within the department of budget and finance for administrative purposes the state health authority. The authority shall be a public body, a public instrumentality, but autonomous to the State.

(b) The authority shall be comprised of three voting members appointed by the governor as provided in section 26-34; provided that one member is selected from a list of nominees submitted by the speaker of the house of representatives and one member is selected from a list of nominees submitted by the president of the senate. All members shall be appointed for terms of six years each, except that the terms of the members first appointed shall be for two, four, and six years, respectively, as designated by the governor at the time of appointment.

(c) An executive director shall be selected by the members.

(d) Each member shall hold office until the member's successor is appointed and qualified.

(e) The concurrence of a majority of all members shall be necessary to make any action of the authority valid.

(f) The salary of the executive director shall be $       a year and the salaries of the authority members shall be $       a year.

-3 State health authority; duties and responsibilities. (a) The authority shall be responsible for:

(1) Overall health planning for the State; and

(2) Determining future capacity needs of health care providers, health care facilities, equipment, support services providers, assisted living facilities, extended care adult residential care homes, health care services, organized ambulatory health care facilities, and primary care clinics.

(b) The authority shall develop a plan that includes:

(1) Providing state-funded health insurance or provision of basic health services for all individuals;

(2) Maximizing federal funds;

(3) Adopting all optional services allowed under the medicaid programs;

(4) Reimbursing all certified health care providers at a rate to be determined by the authority within thirty days of the provision of care; and

(5) Developing a mechanism for collecting or receiving, for purposes of funding the authority's purchase of health care, the following:

(A) Individual or employer contributions, or both;

(B) Federal medicaid matching funds; and

(C) State general fund appropriations.

(c) Any health care coverage provided by the authority to an individual shall be portable; provided that the individual remains a resident as defined in section 235-1.

(d) The authority may seek waivers of federal law, rule, or regulation necessary to implement and maintain the provisions of this chapter.

(e) The authority shall adopt rules pursuant to chapter 91 necessary for the purposes of this chapter.

    -4 Review panel on mandated health care service coverage. (a) There is established within the department of health, for administrative purposes only, a review panel on mandated health care service coverage.

(b) The panel shall be comprised of five members to be appointed by the governor, not subject to section 26-34; provided that:

(1) One member shall be selected from a list of nominees submitted by the speaker of the house of representatives; and

(2) One member shall be selected from a list of nominees submitted by the president of the senate.

(c) The panel shall determine:

(1) The average premium cost of health insurance benefits as a percentage of the average annual wage, as determined by the department of human resources development assisted by the department of accounting and general services;

(2) The portion of the premium cost attributable to benefits that would be provided regardless of statutory mandates;

(3) The portion of the premium cost attributable to mandated health care service coverages;

(4) Financial impact including:

(A) The extent to which mandating coverage will increase or decrease the cost of the service;

(B) The extent to which mandating coverage will increase use of the service and attendant costs;

(C) The extent to which the mandated service will be used as a substitute for a more expensive service and result in cost savings;

(D) The extent to which mandating coverage will increase or decrease the administrative expenses of carriers, and the premiums and administrative expenses of policyholders, members of mutual benefit societies, and subscribers of health maintenance organizations;

(E) The effect of mandating coverage on the total cost of health care; and

(F) The effect of mandating coverage on consumer access to health insurance, and on employers' ability to purchase health benefits policies to meet their employees' needs;

(5) Social impact including:

(A) The extent to which the service is used;

(B) The level of public demand for the service;

(C) The extent to which coverage is already generally available, and if coverage is not generally available, the extent to which the lack of coverage:

(i) Results in individuals avoiding necessary health care treatment; or

(ii) Results in unreasonable hardship;

(D) The level of public demand for the coverage;

(E) The level of interest of collective bargaining agents in negotiating privately for inclusion of this coverage in group contracts; and

(F) The social benefits of providing the mandated health insurance service, including an assessment of the extent to which there is evidence of the efficacy of the health care service to be mandated;

and

(6) Medical impact, or evidence of health care service efficacy including:

(A) The extent to which the mandated benefit will enhance the general health status of consumers of health insurance benefits;

(B) If the services of a category of health providers are to be mandated, the extent to which there are professionally accepted controlled trials demonstrating the health consequences of the services of this category of provider; and

(C) If a service other than those of a specific category of health care providers is to be mandated, the extent to which there are professionally controlled trials demonstrating the health consequences of that service, and comparing the health consequences of that service to those of alternative services, or no service.

(d) The panel shall report its findings to the governor, the legislature, and the authority no later than twenty days prior to the convening of each regular session.

-5 State health authority fund; establishment. (a) The authority shall develop a proposal for the establishment in the state treasury of a state health authority fund, into which may be deposited:

(1) Designated payroll deductions;

(2) Designated corporate income taxes;

(3) Federal medicaid matching funds;

(4) State general funds;

(5) Health care-related portions of insurance provider reimbursements; and

(6) Other funds paid to the authority.

(b) Moneys in the fund shall be used to carry out the duties of the authority."

SECTION 3. Section 321-225, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) The advisory committee shall be composed of twenty members: three nonvoting ex-officio members, who shall be the director of transportation, the adjutant general, and the administrator of the state [health planning and development agency,] health authority, or [the] their designated representatives [thereof], and seventeen members representing all counties of the State who shall be appointed by the governor subject to section 26-34 as follows:

(1) Five members who shall be physicians experienced in the conduct and delivery of emergency medical services; provided that at least two shall be engaged in the practice of emergency medicine and be board-eligible or board-certified by the American Board of Emergency Medicine, and provided further that at least one physician shall be engaged in the practice of pediatrics and be board-eligible or board-certified by the American Board of Pediatrics;

(2) Four members who shall be consumers of health care and who shall have no connection with or relationship to the health care system of the State and who shall be representative of all counties;

(3) Four members of allied health professions related to emergency medical services; and

(4) Four members, one from each county, who shall be mobile intensive care technicians or emergency medical technicians engaged in the practice of pre-hospital emergency medical service.

The members of the advisory committee shall serve without compensation, but shall be reimbursed for necessary expenses incurred in the performance of their duties, including travel expenses. The chairperson of the advisory committee shall be elected by the members from among their numbers. A majority of the members of the advisory committee shall constitute a quorum for the conduct of business of the advisory committee. A majority vote of the members present at a meeting at which a quorum is established shall be necessary to validate any action of the committee."

SECTION 4. Section 325-101, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The records of any person that indicate that a person has a human immunodeficiency virus (HIV) infection, acquired immune deficiency syndrome (AIDS), or AIDS related complex (ARC), [or acquired immune deficiency syndrome (AIDS),] which are held or maintained by any state agency, health care provider or facility, physician, laboratory, clinic, blood bank, third party payor, or any other agency, individual, or organization in the State shall be strictly confidential. For the purposes of this part, the term "records" shall be broadly construed to include all communication that identifies any individual who has HIV infection, ARC, or AIDS. This information shall not be released or made public upon subpoena or any other method of discovery. Notwithstanding any other provision to the contrary, release of the records protected under this part shall be permitted under the following circumstances:

(1) Release is made to the department of health in order that it may comply with federal reporting requirements imposed on the State. The department shall ensure that personal identifying information from these records is protected from public disclosure;

(2) Release is made of the records, or of specific medical or epidemiological information contained therein, with the prior written consent of the person or persons to whom the records pertain;

(3) Release is made to medical personnel in a medical emergency only to the extent necessary to protect the health, life, or well-being of the named party;

(4) Release is made from a physician licensed pursuant to chapter 453 or 460 to the department of health to inform the sexual or needle sharing contact of an HIV seropositive patient where:

(A) There is reason for the physician to believe that the contact is or has been at risk of HIV transmission as a result of the index patient having engaged in conduct which is likely to transmit HIV; and

(B) The index patient has first been counseled by the physician of the need for disclosure and the patient is unwilling to inform the contact directly or is unwilling to consent to the disclosure of the index patient's HIV status by the physician or the department of health; provided that the identity of the index patient is not disclosed; and provided further that there is no obligation to identify or locate any contact. Any determination by a physician to disclose or withhold disclosure of an index patient's sexual contacts to the department of health pursuant to this subsection which is made in good faith shall not be subject to penalties under this part or otherwise subject to civil or criminal liability for damages under the laws of the State;

(5) Release is made by the department of health of medical or epidemiological information from the records to medical personnel, appropriate county and state agencies, blood banks, plasma centers, organ and tissue banks, schools, preschools, day care centers, or county or district courts to enforce this part and to enforce rules adopted by the department concerning the control and treatment of HIV infection, ARC, and AIDS, or to the sexual or needle sharing contacts of an HIV seropositive index patient for purposes of contact notification as provided in paragraph (4); provided that the identity of the index patient, if known, shall not be disclosed; provided further that release of information under this paragraph shall only be made by confidential communication to a designated individual charged with compliance with this part;

(6) Release of a child's records is made to the department of human services for the purpose of enforcing chapters 350 and 587;

(7) Release of a child's records is made within the department of human services and to child protective services team consultants under contract to the department of human services for the purpose of enforcing and administering chapters 350 and 587 on a need to know basis pursuant to a written protocol to be established and implemented, in consultation with the director of health, by the director of human services;

(8) Release of a child's records is made by employees of the department of human services authorized to do so by the protocol established in paragraph (7) to a natural parent of a child who is the subject of the case when the natural parent is a client in the case, the guardian ad litem of the child, the court, each party to the court proceedings, and also to an adoptive or a prospective adoptive parent, an individual or an agency with whom the child is placed for twenty-four hour residential care, and medical personnel responsible for the care or treatment of the child. When a release is made to a natural parent of the child, it shall be with appropriate counseling as required by section 325-16. In no event shall proceedings be initiated against a child's natural parents for claims of child abuse under chapter 350 or harm to a child or to affect parental rights under chapter 587 solely on the basis of the HIV seropositivity of a child or the child's natural parents;

(9) Release is made to the patient's health care insurer to obtain reimbursement for services rendered to the patient; provided that release shall not be made if, after being informed that a claim will be made to an insurer, the patient is afforded the opportunity to make the reimbursement directly and actually makes the reimbursement;

(10) Release is made by the patient's health care provider to another health care provider for the purpose of continued care or treatment of the patient;

(11) Release is made pursuant to a court order, after an in camera review of the records, upon a showing of good cause by the party seeking release of the records;

(12) Disclosure by a physician, on a confidential basis, of the identity of a person who is HIV seropositive and who also shows evidence of tuberculosis infection, to a person within the department of health as designated by the director of health for purposes of evaluating the need for or the monitoring of tuberculosis chemotherapy for the person and the person's contacts who are at risk of developing tuberculosis; or

(13) Release is made for the purpose of complying with sections 325-16.5 and 801D-4(b). Nothing in this section shall be construed to prohibit a victim to whom information is released pursuant to section 325-16.5 from requesting the release of information by a physician or HIV counselor to a person with whom the victim shares a privileged relationship recognized by chapter 626; provided that prior to such release, the person to whom the information is to be released shall be required to sign a notice of HIV status disclosure advising them of the confidentiality provisions regarding HIV test results and the penalties for unlawful disclosure to any person other than a designated physician or HIV counselor.

As used in this part, unless the context requires otherwise:

"Medical emergency" means any disease-related situation that threatens life or limb.

"Medical personnel" means any health care provider in the State, as provided in section [323D-2,] ______-1, who deals directly or indirectly with the identified patient or the patient's contacts, and includes hospital emergency room personnel, the staff of the communicable disease division of the department of health, and any other department personnel as designated by the director."

SECTION 5. Section 431:10H-301, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) For the purpose of subsection (b) and for the purpose of describing examples of services typically found in this State, coverage shall be one or more of the following services or any combination of services:

(1) Home health care services, as defined in section 431:10H-201;

(2) Adult day care, as defined in section 431:10H-201;

(3) Adult residential care home, as defined in section 321-15.1;

(4) Extended care adult residential care home, as defined in section [323D-2;] -1;

(5) Nursing home, as defined in section 457B-2;

(6) Skilled nursing facilities and intermediate care facilities, as referenced in section 321-11(10);

(7) Hospices, as referenced in section 321-11;

(8) Assisted living facility, as defined in section [323D-2;] -1;

(9) Personal care, as defined in section 431:10H-201;

(10) Respite care, as defined in section 333F-1; and

(11) Any other care as provided by rule of the commissioner."

SECTION 6. Section 453-3, Hawaii Revised Statutes, is amended to read as follows:

"453-3 Limited and temporary licenses. The board of medical examiners shall issue a limited and temporary license to an applicant who has not been examined as required by section 453-4, and against whom no disciplinary proceedings are pending in any state or territory, if the applicant is otherwise qualified to be examined, and upon determination that:

(1) There is an absence or a shortage of licensed physicians in a particular locality, and that the applicant has been duly licensed as a physician by written examination under the laws of another state or territory of the United States. A limited and temporary license issued hereunder shall permit the practice of medicine and surgery by the applicant only in the particular locality, and no other, as shall be set forth in the license issued to the applicant. The license shall be valid only for a period of eighteen months from the date of issuance. The board shall establish guidelines to determine a locality with an absence or shortage of physicians. For this purpose, the board may consider a locality to have an absence or shortage of physicians if the absence or shortage results from the temporary loss of a physician. In designating a locality with an absence or shortage of physicians, the board shall not delegate its authority to a private organization;

(2) The applicant is to be employed by an agency or department of the state or county government, and that the applicant has been duly licensed as a physician by written examination under the laws of another state or territory of the United States. A limited and temporary license issued hereunder shall only be valid for the practice of medicine and surgery while the applicant is in the employ of such governmental agency or department and in no case shall be used to provide private patient care for a fee. A license issued under this paragraph may be renewed from year to year;

(3) The applicant would practice medicine and surgery only while under the direction of a physician regularly licensed in the State other than as permitted by this section, and that the applicant intends to take the regular licensing examination conducted by the board within the next eighteen months. A limited and temporary license issued under this paragraph shall be valid for no more than eighteen months from the date of issuance, unless otherwise extended at the discretion of the board of medical examiners; provided that this discretionary extension shall not exceed a period of six months beyond the original expiration date of the limited and temporary license;

(4) The applicant has been appointed as a resident or accepted for specialty training in a health care facility [or], organized ambulatory health care facility as defined in section [323D-2] -1, or a hospital approved by the board, and that the applicant shall be limited in the practice of medicine and surgery to the extent required by the duties of the applicant's position or by the program of training while at the health care facility, organized ambulatory health care facility, or hospital. The license shall be valid during the period in which the applicant remains as a resident in training, and may be renewed from year to year during the period; or

(5) A public emergency exists, and that the applicant has been duly licensed as a physician by written examination under the laws of another state or territory of the United States. A limited and temporary license issued hereunder shall only be valid for the period of such public emergency.

Nothing herein requires the registration or licensing hereunder of nurses, or other similar persons, acting under the direction and control of a licensed physician."

SECTION 7. Section 489-2, Hawaii Revised Statutes, is amended by amending the definition of "place of public accommodation" to read as follows:

""Place of public accommodation" means a business, accommodation, refreshment, entertainment, recreation, or transportation facility of any kind whose goods, services, facilities, privileges, advantages, or accommodations are extended, offered, sold, or otherwise made available to the general public as customers, clients, or visitors. By way of example, but not of limitation, place of public accommodation includes facilities of the following types:

(1) A facility providing services relating to travel or transportation;

(2) An inn, hotel, motel, or other establishment that provides lodging to transient guests;

(3) A restaurant, cafeteria, lunchroom, lunch counter, soda fountain, or other facility principally engaged in selling food for consumption on the premises of a retail establishment;

(4) A shopping center or any establishment that sells goods or services at retail;

(5) An establishment licensed under chapter 281 doing business under a class 4, 5, 7, 8, 9, 10, 11, or 12 license, as defined in section 281-31;

(6) A motion picture theater, other theater, auditorium, convention center, lecture hall, concert hall, sports arena, stadium, or other place of exhibition or entertainment;

(7) A barber shop, beauty shop, bathhouse, swimming pool, gymnasium, reducing or massage salon, or other establishment conducted to serve the health, appearance, or physical condition of persons;

(8) A park, a campsite, or trailer facility, or other recreation facility;

(9) A comfort station; or a dispensary, clinic, hospital, convalescent home, or other institution for the infirm;

(10) A professional office of a health care provider, as defined in section [323D-2,] -1, or other similar service establishment;

(11) A mortuary or undertaking establishment; and

(12) An establishment that is physically located within the premises of an establishment otherwise covered by this definition, or within the premises of which is physically located a covered establishment, and which holds itself out as serving patrons of the covered establishment.

No place of public accommodation defined in this section shall be requested to reconstruct any facility or part thereof to comply with this chapter."

SECTION 8. Section 622-58, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) Medical records may be destroyed after the seven-year retention period or after minification, in a manner that will preserve the confidentiality of the information in the record; provided that the health care provider retains basic information from each record destroyed. Basic information from the records of a physician or surgeon shall include the patient's name and birthdate, a list of dated diagnoses and intrusive treatments, and a record of all drugs prescribed or given. Basic information from the records of a health care facility, as defined in section [323D-2,] -1, shall include the patient's name and birthdate, dates of admission and discharge, names of attending physicians, final diagnosis, major procedures performed, operative reports, pathology reports, and discharge summaries."

SECTION 9. Section 671-1, Hawaii Revised Statutes, is amended to read as follows:

"671-1 Definitions. As used in this chapter:

[(1)] "Health care provider" means [a]:

(1) A physician or surgeon licensed under chapter 453[, a];

(2) A physician and surgeon licensed under chapter 460[, a];

(3) A podiatrist licensed under chapter 463E[, a];

(4) A health care facility as defined in section [323D-2,]

-1; and [the]

(5) The employees of any of them.

Health care provider shall not mean any nursing institution or nursing service conducted by and for those who rely upon treatment by spiritual means through prayer alone, or employees of [such] the institution or service.

[(2)] "Medical tort" means professional negligence, the rendering of professional service without informed consent, or an error or omission in professional practice, by a health care provider, which proximately causes death, injury, or other damage to a patient."

SECTION 10. Section 671-5, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) A failure on the part of any self-insured health care provider to report as requested by this section shall be grounds for disciplinary action by the board of medical examiners[,] or the board of osteopathic examiners, or the state health [planning agency,] authority, as applicable. A violation by an insurer shall be grounds for suspension of its certificate of authority."

SECTION 11. Chapter 323D, Hawaii Revised Statutes, is repealed.

SECTION 12. (a) There is established within the office of the governor, for administrative purposes only, the state health authority commission.

(b) The commission shall be comprised of five members to be appointed by the governor, not subject to section 26-34; provided that:

(1) One member shall be selected from a list of nominees submitted by the speaker of the house of representatives;

(2) One member shall be selected from a list of nominees submitted by the president of the senate; and

(3) One member shall be the administrator of the state health planning and development agency, or its representative.

(c) The purpose of the commission shall include:

(1) Determining the financing costs of the authority;

(2) Determining a means of and amounts of contributions necessary from individuals and employers, including the possibility of contributions from personal income tax, corporate income tax, and other funds necessary to sustain the authority and provide health care for all Hawaii taxpayers;

(3) Reviewing all types of health benefits and insurance, including the Hawaii employer-union health benefits trust fund, and determining whether they could be incorporated into the authority; and

(4) Determining the feasibility of transferring medicaid-related functions and funding to the authority.

(d) The commission shall seek public input during the planning and development of the financing mechanism.

(e) The commission shall submit a report to the legislature and to the authority no later than twenty days prior to the regular session of 2005 containing:

(1) A detailed plan of costs required by the authority to fulfill its duties;

(2) A detailed financing mechanism; and

(3) Proposed legislation necessary to implement the plan. The commission's plan must be approved by the legislature prior to implementation.

SECTION 13. (a) The state health authority shall seek public input during the planning and development of the program.

(b) The state health authority shall develop a detailed plan to purchase health care for all residents of the state not covered by section 2 of this Act. The authority shall submit the plan to purchase health care for eligible Hawaii residents who request to be covered and shall submit a proposal and necessary legislation to the legislature no later than twenty days prior to the regular session of 2005. The authority shall be ready to implement the program no later than July 1, 2005.

SECTION 14. The department of human services shall submit a waiver to the appropriate federal government agency to:

(1) Expand the federal poverty level for Hawaii to three hundred per cent; and

(2) Eliminate the assets test.

SECTION 15. All rights, powers, functions, duties, appropriations, records, equipment, machines, files, supplies, contracts, books, papers, documents, maps, and other personal property of the state health planning and development agency are transferred to the state health authority.

All officers and employees whose functions are transferred by this Act shall be transferred with their functions and shall continue to perform their regular duties upon their transfer, subject to the state personnel laws and this Act.

No officer or employee of the State having tenure shall suffer any loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefit or privilege as a consequence of this Act, and such officer or employee may be transferred or appointed to a civil service position without the necessity of examination; provided that the officer or employee possesses the minimum qualifications for the position to which transferred or appointed; and provided that subsequent changes in status may be made pursuant to applicable civil service and compensation laws.

An officer or employee of the state who does not have tenure and who may be transferred or appointed to a civil service position as a consequence of this Act shall become a civil service employee without the loss of salary, seniority, prior service credit, vacation, sick leave, or other employee benefits or privileges, and without the necessity of examination; provided that such officer or employee possesses the minimum qualifications for the position to which transferred or appointed.

In an office or position held by an officer or employee having tenure is abolished, the officer or employee shall not thereby be separated from public employment, but shall remain in the employment of the state with the same pay and classification and shall be transferred to some other office or position for which the officer or employee is eligible under the personnel laws of the state as determined by the head of the department or the governor.

SECTION 16. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2004-2005 to carry out the purposes of the state health authority commission.

The sum appropriated shall be expended by the department of health for the purposes of this Act.

SECTION 17. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 18. This Act shall take effect on July 1, 2004; provided that:

(1) Section 11 and section 15 shall take effect on July 1, 2005; and

(2) Section 12 shall be repealed on July 1, 2005.