S.R. NO.








REQUESTING A REVIEW OF the licensing requirements for health insurers.


WHEREAS, Kaiser Permanente Hawaii (Kaiser) is the State's largest health maintenance organization (HMO), with a statewide membership of 235,000; and

WHEREAS, since the mid-1990s, Kaiser has offered health coverage on the island of Kauai under a contractual arrangement with the Kauai Medical Group for physician services and Wilcox Hospital for in-hospital services; and

WHEREAS, Kaiser currently provides coverage for approximately 4,700 Kauai residents, most of whom are government employee members of the Employer Union Trust Fund (EUTF); and

WHEREAS, as of December 31, 2004, Kaiser will no longer provide coverage under commercial employer-sponsored health plans on Kauai, including under plans offered by the EUTF, a small group of commercial businesses, and national employers; and

WHEREAS, Kaiser has reported that it is withdrawing from the Kauai market due to the cost of contracting services and because under the new EUTF contract, participating insurers are no longer required to provide statewide coverage; and

WHEREAS, with the withdrawal of Kaiser, Kauai state and county employees will have no health insurer options and will be forced to obtain coverage through the EUTF from the Hawaii Medical Service Association; and

WHEREAS, health maintenance organizations, such as Kaiser, and other health insurance organizations, are allowed to conduct business in this State under a certificate of authority issued by the Insurance Division of the Department of Commerce and Consumer Affairs (DCCA); and

WHEREAS, the requirements for a certificate of authority generally include adequate capitalization, prior insurance transaction experience, and submission of business and financial documents; and

WHEREAS, as a condition of doing business in this State, insurers are not required to provide statewide coverage nor are they prohibited from selecting only certain geographical areas in which to offer insurance coverage; and

WHEREAS, the Legislature finds that Kaiser's withdrawal from Kauai will have a significant impact upon Kaiser's Kauai enrollees; and

WHEREAS, pursuant to section 26-9, Hawaii Revised Statutes (HRS), DCCA is charged with protecting the interests of consumers throughout the State; and

WHEREAS, further, section 431:1-102, HRS, proclaims that the business of insurance is affected by the public interest and that equity should be practiced in all insurance matters; and

WHEREAS, the Legislature further finds that DCCA should review the licensing requirements for health insurers to determine whether current requirements promote equity in insurance, fairness, and consumer protection; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-Second Legislature of the State of Hawaii, Regular Session of 2004, that the Department of Commerce and Consumer Affairs is requested to:

(1) Review the licensing requirements for health insurers, especially with respect to the issue of selected geographical coverage by an insurer; and

(2) Recommend legislative, administrative, or other actions required to promote fairness and consumer access in the provision of health insurance; and

BE IT FURTHER RESOLVED that the Department of Commerce and Consumer Affairs is requested to submit its findings and recommendations to the Legislature no later than twenty days before the convening of the Regular Session of 2005; and

BE IT FURTHER RESOLVED that a certified copy of this Resolution be transmitted to the Director of Commerce and Consumer Affairs.






Report Title:

Health Insurers; Review of Licensing Requirements