HOUSE OF REPRESENTATIVES
TWENTY-SEVENTH LEGISLATURE, 2013
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO LONG TERM CARE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that according to the Hawaii long term care commission, only a minority of Americans will ever have private long term care insurance, even in an optimistic economic environment. Therefore, an alternative that matches the mandatory, universal long term care insurance programs found in countries such as Japan and South Korea is to create a more balanced delivery system for long term care for all persons who require it, regardless of their financial need.
The legislature also finds that a public insurance program designed to provide modest income support financed through mandatory contributions by the working-age population would provide a measure of financial protection for individuals who are uninsurable and require long term care. In principle, a proposed public insurance program would be similar to social security. Much like social security, a public insurance program would not be intended to meet all long term care needs, but would instead supplement private initiatives such as private long term care insurance.
The legislature has attempted to address the issue of long term care since the late 1980s. The executive office on aging began to explore long term care initiatives and contracted for an actuarial study for its January 1991 report, "Financing Long Term Care, A Report to the Hawaii State Legislature". Two years later, the Hawaii family hope program, which called for a mandatory state long term care financing program, was introduced during the Regular Session of 1993. Although the Hawaii family hope program was not enacted, attempts to address the question of financing long term care continued over the years.
Act 245, Session Laws of Hawaii 2002, established the Hawaii long term care financing program as a way to provide a universal and affordable system of providing long term care. Known as the care plus program, it was supported by the legislature and the executive office on aging and backed by extensive actuarial models and calculations. The board of trustees established by Act 245 recommended funding such a program with a mandatory dedicated income tax. In 2003, the legislature passed S.B. No. 1088, C.D. 1, which would have implemented the design of the long term care insurance program and the requisite tax necessary to fund it. However, the governor vetoed the measure, and the veto was not overridden.
The legislature further finds that providing for and funding a system of long term care in the State remains an important issue. According to a 2012 update on long term care by the American Association of Retired Persons, without private insurance or public program coverage, the high cost of long term care is unaffordable for most Americans. For example, the national average private pay cost of a nursing home stay in 2012 was about $88,000 per year. However, in Hawaii, the average annual cost is $116,800 for a semi-private room and $125,925 for a private room for nursing home care.
According to the long term care commission, a limited, mandatory, public long term care insurance program may be the only option that will provide insurance coverage to a large majority of people in Hawaii and benefit people with a wide range of income and assets. However, the support for mandatory enrollment in a public long term care insurance program in Hawaii is low. Therefore, an actuarial analysis is needed to provide the basis for a determination on a mandatory tax to implement a limited, mandatory, public long term care insurance program for the State's working population.
The purpose of this Act is to require the director of the executive office on aging to contract for the performance of a feasibility study and an actuarial analysis for a limited, mandatory, public long term care financing program for the State's working population.
SECTION 2. (a) The director of the executive office on aging shall contract for a feasibility study to design a limited, mandatory, public long term care financing program for the State.
(b) The feasibility study shall include an analysis of the following:
(1) A projection of the contribution rates necessary to keep the trust fund dedicated to providing long term care benefits actuarially sound over the short-range and long-range future periods;
(2) The method for collecting premiums;
(3) An estimate of the expected future income to and disbursements to be made from the trust fund in future years;
(4) A projection of the amount of benefit each resident of the State would derive from paying into a trust fund dedicated to providing long term care benefits;
(5) An estimate of how long the contributions would need to be collected before benefits could be paid out;
(6) An estimate of the likely impact on medicaid rolls, if any;
(7) A statement on the minimum and maximum age for employed persons to be eligible to enroll;
(8) Definition of "employment" for purposes of determining eligibility of benefits;
(9) Minimum period of premium payment before eligibility of benefits;
(10) A statement on the length of benefit coverage;
(11) A statement on the amount of cash benefit, whether it varies by disability level, and whether it has an inflation adjustment over time;
(12) A statement on whether individuals need to pay in for life, until retirement, or until they have paid in for a specified number of years;
(13) A statement on whether premiums should be level or increase with inflation over time;
(14) A statement on whether low-income individuals should be exempt from participation;
(15) A statement on a graduated, sliding fee premium;
(16) A statement on how the program should be administered;
(17) A statement of actuarial assumptions and methods used to determine costs and a detailed explanation of any change in actuarial assumptions or methods;
(18) A statement on tax incentives for the purchase of long term care insurance;
(19) A statement on the return of investment to specifically address where the resources will reside, such as in a special fund or separate account for long term care resources, and the investment strategy for these resources; and
(20) A statement on the medicaid or long term care public-private partnership plan that has been adopted in other states.
SECTION 3. (a) The director of the executive office on aging shall contract for the performance of an actuarial analysis by a licensed actuary who is a member in good standing with the American Academy of Actuaries.
(b) The actuarial analysis shall contain a statement by the actuary certifying that the techniques and methods used are generally accepted within the actuarial profession and that the assumptions and cost estimates used are reasonable.
(c) The actuarial analysis shall provide a financial analysis of the limited, mandatory, public long term care financing program. The analysis shall include:
(1) In conjunction with the feasibility study, cost projections of the items listed in section 2(b) of this Act; and
(2) The amount of the mandatory tax required to implement a limited, mandatory, public long term care financing program in the State.
SECTION 4. The feasibility study and actuarial analysis shall be completed and submitted to the director of the executive office on aging by June 30, 2014. The director of the executive office on aging shall submit a report, including the director's findings and recommendations based on the feasibility study and actuarial analysis, to the legislature no later than twenty days prior to the convening of the regular session of 2015.
SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2013-2014 for the performance of a feasibility study and an actuarial analysis pursuant to this Act.
The sum appropriated shall be expended by the executive office on aging of the department of health for the purposes of this Act.
SECTION 6. This Act shall take effect on July 1, 2030.
Feasibility Study; Actuarial Analysis; Long Term Care; Executive Office on Aging; Appropriation
Requires the Director of the Executive Office on Aging to contract for the performance of a feasibility study and an actuarial analysis for a limited, mandatory, public long term care insurance program for the State's working population. Appropriates funds. Effective 7/1/2030. (SD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.