HOUSE OF REPRESENTATIVES

H.R. NO.

125

TWENTY-FOURTH LEGISLATURE, 2008

H.D. 1

STATE OF HAWAII

 

 

 

 

 

HOUSE RESOLUTION

 

 

URGING THE INSURANCE COMMISSIONER TO INITIATE AN INVESTIGATION AND CORPORATE AUDIT OF THE HAWAII MEDICAL SERVICES ASSOCIATION'S PRACTICE OF MAINTAINING AN EXCESSIVE SURPLUS, PROVIDING LARGE BONUSES TO STAFF, AND REIMBURSEMENT PATTERNS OVER THE PAST TEN YEARS TO DETERMINE IF THE CHARITABLE RETURN TO THE COMMUNITY JUSTIFIES ITS NONPROFIT STATUS.

 

 

 


     WHEREAS, Hawaii Medical Services Association (HMSA) covers 60 percent of the health insurance in the state; and  

 

     WHEREAS, in 2007, $1.8 million in bonuses was paid to HMSA executives at the same time that the company was proclaiming that doctors are leaving the state because they cannot afford to work here; and

 

     WHEREAS, HMSA is exempt from state premium taxes because it was set up in 1938 as a mutual benefit society; and

 

     WHEREAS, this exemption allowed HMSA to withhold $560 million in state taxes over the past ten years;

 

     WHEREAS, the State's safety net hospitals, organized under the Hawaii Health Systems Corporation (HHSC), reported a deficit

of $30.8 million, which prompted them to approach the Legislature with a request this session for an emergency appropriation to ensure continuous services; and

 

     WHEREAS, a recent study showed that Hawaii hospitals receive 92 cents on the dollar of its costs from commercial insurers; and

 

     WHEREAS, contrary to the study, HMSA has stated that reimbursements to doctors average 120 percent of the Medicare rate; and

 

     WHEREAS, the national average for medical reimbursements is close to 135 percent of the Medicare fee schedule; and

 

     WHEREAS, HMSA's actions in:

 

(1)  Providing minimal reimbursements to health care providers;

 

(2)  Rewarding its executives with large bonuses at the expense of Hawaii's health care safety net;

 

(3)  Maintaining an enormous surplus rather than providing fair rates of reimbursements; and

 

(4)  Offering charitable services to the community that would justify its tax-exempt status,

 

justify action on behalf of the State in investigating HMSA's business practices and its tax-exempt status; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2008, that the Insurance Commissioner is urged to initiate an investigation and corporate audit of HMSA's practice of maintaining an excessive surplus, providing large bonuses to staff in relation to its nonprofit status, and its reimbursement patterns over the past ten years, to determine if the HMSA's charitable return to the community justifies its nonprofit status; and

 

     BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Attorney General,

Insurance Commissioner of the Department of Commerce and Consumer Affairs, Chief Executive Officer of HHSC, and Chief Executive Officer of HMSA.

 

 

 

Report Title: 

HMSA Investigation; Insurance Commissioner