HOUSE OF REPRESENTATIVES

H.R. NO.

170

TWENTY-THIRD LEGISLATURE, 2005

 

STATE OF HAWAII

 
   


HOUSE RESOLUTION

 

REQUESTING THE LEGISLATIVE REFERENCE BUREAU TO STUDY AND REPORT ON COMPETITIVE PRACTICES OF HEALTH INSURERS, MUTUAL BENEFIT SOCIETIES, AND HEALTH MAINTENANCE ORGANIZATIONS.

 

WHEREAS, in 1994 the Legislature requested the Legislature Reference Bureau to study competitive practices of health insurers, mutual benefit societies, and health maintenance organizations (HMOs); and

WHEREAS, the Legislative Reference Bureau presented its study and report in two parts in 1994 and 1996 based in large part upon data collected as of 1994; and

WHEREAS, in 2002, the House of Representatives Committee on Commerce and Consumer Affairs reported that "[h]ealth plans in this State are organized as nonprofits and while they pay a reduced health plan fee, they pay no State taxes, pay reduced federal taxes, and have no shareholder"; and

WHEREAS, the Committee also noted "the fact that in Hawaii one health plan controls almost ninety percent of the private fee-for-service market, and that its largest competitor dominates the clinic-based HMO market" and that "[w]ithout significant competition, Hawaii's consumers have little choice but to pay the rates set by the major health plans or go without essential health care services"; and

WHEREAS, in response, the Legislature enacted legislation to increase competition in the business of health insurance and to moderate the increasing cost of medical insurance, notably the rate regulation statute in 2002; and

WHEREAS, the rate regulation statute will be repealed June 30, 2006, unless extended; and

WHEREAS, health care costs in Hawaii continue to rise faster than the cost of most other goods and services, and in the years subsequent to 1994 there have been significant changes in the community, the market, and in the health insurers themselves with some health insurers having entered the health insurance business and some left it; and

WHEREAS, concerns have been raised about the impact of the present market situation on free competition; and

WHEREAS, concerns have also been raised about the potential for conflict of interest when a non-profit tax-exempt entity, theoretically operating for the benefit of its members, is subjected to limited oversight and allowed to operate without effective control by either its members or the Insurance Commissioner; and

WHEREAS, an update of the Legislative Reference Bureau's two part study and report would assist the Legislature in its consideration of legislation to extend rate regulation, as well as consideration of legislation to bring tax-exempt insurers under additional regulation in regard to their business practices and competitiveness; and

WHEREAS, the State has a vital interest in ensuring that its residents have adequate access to affordable and quality health care services and access to the insurance necessary to pay for those services; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2005, that the Legislative Reference Bureau is requested to conduct a study of the competitive practices of health insurers, mutual benefit societies, health maintenance organizations, and any other organization providing health care coverage in Hawaii; and

BE IT FURTHER RESOLVED that the study include but not be limited to:

(1) A review and description of the administrative structures and operations of each of these organizations, including persons covered, benefits and services offered, rates, rate setting practices, financial condition, administrative costs, and profits;

(2) An assessment of the impact that the size of these organizations have on competition and the cost of health care, in particular the impact of limitations imposed by tax-exempt non-profit entities on information available to the consumer and to the public;

(3) A determination of the current level of oversight of these organizations by the Department of Commerce and Consumer Affairs and other appropriate state agencies;

(4) An assessment of the competitive practices of these organizations and the impact of these practices on the price and quality of health care in Hawaii, including those which may limit access to health care coverage or increase health care costs;

(5) An assessment of the impact on competition, quality, and cost of health care that the provider agreements used by insurers have in both the provision of health care services and payment for services delivered; and

(6) Recommendations for guidelines (if any) for oversight of the practices of these organizations in order to protect the public interest and assure access to affordable, quality health care in Hawaii; and

BE IT FURTHER RESOLVED that the Department of Commerce and Consumer Affairs, the Insurance Commissioner, the Office of Consumer Protection, the State Health Planning and Development Agency (SHPDA), the Department of Labor and Industrial Relations, the Department of Health, and other relevant public agencies, and all private health insurers, HMOs, and other packaged benefit providers in the private sector, are requested to cooperate with the Legislative Reference Bureau in conducting this study; and

BE IT FURTHER RESOLVED that the Legislative Reference Bureau conduct this study by using to the extent feasible national standards of measurement, state experiences, or other data sets; and

BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to report its findings and recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2006; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Director of Commerce and Consumer Affairs, the Director of Labor and Industrial Relations, the Director of Health, the Insurance Commissioner, the Director of the Office of Consumer Protection, the Administrator of SHPDA, the Acting Director of the Legislative Reference Bureau, the Hawaii Independent Physicians Association, the Coalition for Health, the Employers’ Chamber of Commerce, Kaiser Foundation Health Plan, and the Hawaii Association of Health Underwriters.

 

 

 

OFFERED BY:

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Report Title:

Requesting the LRB to study and report on competitive practices of health insurers, mutual benefit societies, and health maintenance organizations.