Honolulu, Hawaii



RE:    H.B. No. 1525

       H.D. 1

       S.D. 1




Honorable Colleen Hanabusa

President of the Senate

Twenty-Fifth State Legislature

Regular Session of 2009

State of Hawaii




     Your Committees on Human Services and Judiciary and Government Operations, to which was referred H.B. No. 1525, H.D. 1, entitled:




beg leave to report as follows:


     The purpose of this measure is to require the Department of Human Services to award medicaid contracts to nonprofit insurance entities only.


     Testimony in support of this measure was submitted by the Hawaii Government Employees Association and the Hawaii Primary Care Association.  The State Council on Developmental Disabilities and the Waianae Coast Comprehensive Health Center supported the intent, and Evercare Hawaii provided comments.  Testimony in opposition of this measure was submitted by the Department of Human Services, the Hawaii Medical Service Association, and Goodwill Industries of Hawaii, Inc.  Written testimony presented to your Committees may be reviewed on the Legislature's website.


     Your Committees find that recent events in other states have led to a growing concern that for-profit medicaid health care insurance entities may not be the most suitable providers for Hawaii's medicaid recipients.  The fear is that for-profit entities may cease operations in the State of Hawaii unexpectedly if the profit margin is too low.  However, your Committees note that whether the entity is nonprofit or for-profit, there is a great need for transparency for these providers.  The disclosure of information in the health care marketplace will help improve access and the delivery of affordable, quality health care services for consumers. 


     Your Committees have amended this measure by replacing its contents with the contents of the proposed draft of H.B. 1525, H.D. 1, S.D. 1, which was circulated prior to this hearing.  Due to concerns raised during the hearing, your Committees have amended the measure.  The proposed draft, as amended, requires all future medicaid health care insurance contracts to be awarded only to qualified nonprofit and for-profit entities that comply with annual reporting requirements, as follows:


     (1)  Submit certified audit reports for the contracted services; and


     (2)  Provide the medical loss ratio, administrative costs, profit margin, return to investors, number of employees in the State with category of work, description of any on-going proceedings or investigations to the extent as may be allowed by law, total compensation for highest paid employees in the State and nationwide, and a list of all management and administrative service contracts.


     In addition, the amended measure includes an effective date of January 1, 2016.


     As affirmed by the records of votes of the members of your Committees on Human Services and Judiciary and Government Operations that are attached to this report, your Committees are in accord with the intent and purpose of H.B. No. 1525, H.D. 1, as amended herein, and recommend that it pass Second Reading in the form attached hereto as H.B. No. 1525, H.D. 1, S.D. 1, and be referred to the Committee on Ways and Means.


Respectfully submitted on behalf of the members of the Committees on Human Services and Judiciary and Government Operations,