THE SENATE

S.C.R. NO.

146

THIRTY-FIRST LEGISLATURE, 2021

 

STATE OF HAWAII

 

 

 

 

 

SENATE CONCURRENT

RESOLUTION

 

 

REQUESTING THE LEGISLATIVE REFERENCE BUREAU TO CONDUCT A STUDY RELATING TO THE STATE'S AUTHORITY TO ALLOW COLLECTIVE NEGOTIATION BETWEEN PHYSICIANS AND HEALTH CARE INSURERS IN HAWAII TO RESTRAIN OR BALANCE THE MONOPSONISTIC MARKET POWER OF HEALTH CARE INSURERS OVER INDEPENDENT PHYSICIANS.

 

 

 


     WHEREAS, the health care system in Hawaii is in crisis because there is a severe shortage of physicians in the State; and

 

     WHEREAS, the gap between supply and demand for physicians in Hawaii continues to increase and has been exacerbated by the COVID-19 pandemic, according to the 2020 Physician Workforce Assessment Project conducted by the Area Health Education Center at the University of Hawaii at Manoa John A. Burns School of Medicine; and

 

     WHEREAS, the Physician Workforce Assessment Project also reported an estimated shortage of one thousand eight physicians, with the neighbor islands being hardest hit; and

 

     WHEREAS, the physician shortage in each county in 2020 was twenty percent on Oahu, compared with fifty-three percent for Hawaii island, forty-two percent for Maui County, and thirty-three percent for Kauai; and

 

     WHEREAS, the physician shortage is due to the State's increasing inability to recruit and retain physicians, and poses a serious problem for Hawaii residents because it prevents timely and appropriate access to life-saving health care; and

 

     WHEREAS, a primary barrier to recruiting and retaining physicians is the fact that physician compensation in Hawaii is relatively low and not competitive nationally, as evidenced by Hawaii's inability to attract qualified out-of-state physicians or to retain graduates from the John A. Burns School of Medicine in Honolulu; and

 

     WHEREAS, a major factor in the relatively low compensation for Hawaii's physicians is the State's highly concentrated health insurance market; and

 

     WHEREAS, a 2019 examination of the Hawaii insurance market by the American Medical Association entitled "Competition in Health Insurance:  A Comprehensive Study of U.S. Markets", reveals a highly concentrated total insurance market in Hawaii, with a single insurer controlling sixty-seven percent of the total market, and its second largest insurer controlling twenty-one percent; and

 

     WHEREAS, the American Medical Association ranked Hawaii to be the third least competitive health insurance market in the nation, behind only Alabama and Louisiana; and

 

     WHEREAS, highly concentrated health insurance markets are said to cause disparate, imbalanced, and monopsonistic market power between insurers and the independent physicians providing health care services; and

 

     WHEREAS, in addition to market concentration, the relatively weak bargaining power of physicians compared to health insurers is also a result of federal antitrust law, which generally bars physicians from collectively negotiating their contracts with insurers, and contributes to the monopsonistic market favoring insurers; and

 

     WHEREAS, independent physicians contend that such monopsony power enables health plans to approach contract negotiations with a "take-it-or-leave-it" attitude that puts physicians in the untenable position of accepting inappropriate and adhesive contract terms; and

 

     WHEREAS, in Parker v. Brown, 317 U.S. 341 (1943), the United States Supreme Court created an exemption to federal antitrust laws referred to as state action immunity or the Parker immunity doctrine, which authorized state actions that could foreseeably cause anti-competitive effects when taken pursuant to a clearly expressed and legislatively adopted state policy; and

 

     WHEREAS, in 2009, the Alaska Legislature found that permitting physicians to engage in collective negotiation of contracts with health benefit plans is appropriate and necessary to benefit competition in the health care market, and enacted a law consistent with the Parker immunity doctrine to authorize collective negotiations between competing physicians and health benefit plans; and

 

     WHEREAS, it is appropriate and necessary for Hawaii to consider authorizing physicians to collectively negotiate their contracts with health benefit plans to address the physician shortage crisis in the State; now, therefore,

 

     BE IT RESOLVED by the Senate of the Thirty-first Legislature of the State of Hawaii, Regular Session of 2021, the House of Representatives concurring, that the Legislative Reference Bureau is requested to conduct a study relating to the State's authority to allow collective negotiation between physicians and health care insurers in Hawaii to restrain or balance the monopsonistic market power of health care insurers over independent physicians; and

 

     BE IT FURTHER RESOLVED that the study is requested to include an examination of the Alaska law authorizing collective negotiation by physicians, the Parker immunity doctrine and its current legal status, the extent of any statutory or policy implementation by other states relating to collective negotiation by physicians, and whether and how enacting a law similar to Alaska's law on collective negotiation by physicians would impact the State's Prepaid Health Care Act exemption from the federal Employee Retirement Income Security Act of 1974; and

 

     BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to submit a report of its findings and recommendations, including any proposed legislation to allow collective negotiation between physicians and health care insurers in Hawaii, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2022; and

     BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Senate President, Speaker of the House of Representatives, and Director of the Legislative Reference Bureau.

 

 

 

 

OFFERED BY:

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Report Title: 

Antitrust Law; Parker Immunity Doctrine; Legislative Reference Bureau; Collective Negotiation; Physicians