STAND. COM. REP. NO. 1440

Honolulu, Hawaii

, 2005

RE: H.B. No. 106

H.D. 3

S.D. 2

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection, and Housing, to which was referred H.B. No. 106, H.D. 3, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO HEALTH INSURANCE,"

begs leave to report as follows:

The purposes of this measure are to require health insurers to provide employers with group health claims experience and to prohibit "broad discretionary authority" clauses in health insurance contracts.

The Department of Commerce and Consumer Affairs, University Health Alliance, and Employers' Chamber of Commerce testified in support of this measure. HMAA, Hawaii Medical Service Association, and Hawaii Association of Health Plans testified in support of part I of this measure. Kaiser Permanente and America's Health Insurance Plans opposed part II of this measure.

This measure requires health insurers to provide aggregate health claims experience to employers with fifty or more employees within sixty days of a request for the information and upon payment of a processing fee not to exceed $50. Your Committee finds that this requirement will help employers who provide health insurance benefits for their employees to better evaluate their plan rates without compromising the confidentiality of protected personal health information.

Additionally, this measure prohibits the inclusion of clauses in health insurance contracts that provide the insurer with broad discretion to determine the type and scope of coverage provided under the contract. Your Committee further finds that these clauses favor insurers in legal proceedings regarding coverage disputes since, in order to prevail, an insured individual must prove that the insurer's denial was arbitrary and capricious, a difficult legal standard to overcome. Your Committee further finds that prohibiting "broad discretionary authority" clauses will help to level the playing field in disputes between health insurers and their insured.

Your Committee has amended this measure:

(1) To include the contents of S.B. No. 760, S.D. 1, a measure previously approved by your Committee that lowered the maximum reserves ceiling for managed care plans and prohibited rate increases for plans with reserves in excess thereof;

(2) To have all provisions take effect upon its approval; and

(3) By making technical amendments to reflect preferred drafting style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection, and Housing that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 106, H.D. 3, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as H.B. No. 106, H.D. 3, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection, and Housing,

____________________________

RON MENOR, Chair