4HOUSE OF REPRESENTATIVES

H.C.R. NO.

29

TWENTY-FIRST LEGISLATURE, 2002

H.D. 2

STATE OF HAWAII

 
   


HOUSE CONCURRENT

RESOLUTION

 

REQUESTING THE CONVENING OF A TASK FORCE TO EXAMINE THE HAWAII PREPAID HEALTH CARE ACT, CHAPTER 393, HAWAII REVISED STATUTES.

 

WHEREAS, in 1974, in an effort to ensure that the working people of Hawaii had access to adequate health care, the Legislature passed Act 210, Session Laws of Hawaii 1974, which has been codified as chapter 393, Hawaii Revised Statutes, and is now known as the Hawaii Prepaid Health Care Act (PHCA); and

WHEREAS, PHCA follows the following seven principles, articulated in the article Prepaid Health Care in Hawaii by Professor Stefan Riesenfeld:

(1) Every regular employee in private employment shall be protected by a prepaid plan providing for hospital, surgical, and medical benefits;

(2) The level of benefits should conform with the prevailing community standards;

(3) Unless a collective bargaining agreement or self-initiated employer's policy provides for an allocation of the costs more beneficial to the employee, the costs shall be shared equally by the employer and the employee;

(4) The prescribed coverage may be provided with any of the existing prepayment plan operators regardless of whether they provide services, such as Kaiser or other medical group plans, or reimbursement, either on a nonprofit principle, such as HMSA or similar organizations, or on the profit principle, such as commercial carriers;

(5) The scheme does not intend to interfere with the collective bargaining process or interfere with the services provided pursuant to such collective agreements, as in the sugar industry;

(6) The free choice of physician by the employee shall be protected; and

(7) In order to avoid an oppressive burden on low-wage earners and their employers, the mandatory scheme should be coupled with a plan for a premium supplementation from general revenues;

and

WHEREAS, PHCA mandates employers to provide adequate prepaid health care coverage to employees working at least twenty hours per week; and

WHEREAS, since its enactment, PHCA has accomplished a great deal in terms of providing adequate health care coverage for the working people of Hawaii, defining a basic health care coverage benefits package long before the idea became a standard, and enfranchising tens of thousands of people; and

WHEREAS, when the U.S. Congress enacted the Employee Retirement Income Security Act of 1974 (ERISA) three months after the enactment of PHCA, the issue of whether federal law preempted PHCA arose; and

WHEREAS, in 1977, Standard Oil Company of California, a self-insured employer with workers in Hawaii, filed suit in federal court, essentially questioning whether self-insured employers were subject to state regulation of employee benefits; and

WHEREAS, the court found in favor of Standard Oil and held that ERISA preempted PHCA; and

WHEREAS, Hawaii sought and successfully obtained a waiver exempting PHCA from ERISA preemption from the U.S. Congress in 1983; and

WHEREAS, although the waiver exempted PHCA from ERISA, it also specifically prohibited ERISA exemption of any changes to PHCA after September 2, 1974, other than those that might improve "effective administration" of the Act; and

WHEREAS, this exemption essentially froze PHCA in the form it was passed in 1974; and

WHEREAS, the frozen status of PHCA has generated controversy to the extent that some argue that the waiver language does not allow PHCA to evolve with the times; and

WHEREAS, during public hearings of the Mandated Benefits Advisory Task Force (Task Force), which was convened pursuant to H.C.R. No. 129 (2001), the Task Force was made aware of the problems associated with PHCA; and

WHEREAS, the Task Force found that these issues merit an in-depth examination and review of PHCA, and some of the specific issues raised in its deliberations include:

(1) The requirement that the employee's share for health care premiums is fixed at 1.5 per cent of wages; provided that if the employee's contribution is less than one-half of the premium, the employer is liable for the remaining portion of the premium;

(2) The requirement that the employee not have to pay a premium higher than what is provided by the contractor providing the prevailing coverage of the type of health care plan; and

(3) The process by which the Prepaid Health Care Advisory Council recommends the approval of prepaid health care plans;

and

WHEREAS, PHCA, if amended, could possibly expand health care coverage for Hawaii's residents; and

WHEREAS, some members of the community, such as the Hawaii Uninsured Project, have already begun extensive efforts to analyze health insurance coverage issues in Hawaii and PHCA; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-first Legislature of the State of Hawaii, Regular Session of 2002, the Senate concurring, that the Governor is requested to convene a task force (PHCA Task Force)of no more than sixteen members, with the Insurance Commissioner serving as both a member and the Chair of the PHCA Task Force, to review and examine the effectiveness of PHCA; and

BE IT FURTHER RESOLVED that at least one representative from each of the following interests be appointed as a member of the PHCA Task Force; provided that members of other groups may also be appointed:

(1) The Department of Labor and Industrial Relations;

(2) A mutual benefit society that provides health insurance under chapter 432, Hawaii Revised Statutes;

(3) A health maintenance organization that holds a certificate of authority under chapter 432D, Hawaii Revised Statutes;

(4) A business organization that represents small businesses with 20 or fewer employees;

(5) A business organization that represents larger businesses with more than 20 employees;

(6) A labor union that represents public sector employees;

(7) A labor union that represents private sector employees;

(8) A consumer health advocacy organization;

(9) An organization that represents licensed physicians;

(10) An organization that represents alternate complementary care service providers;

(11) A representative of hospitals; and

(12) A representative of the Hawaii Uninsured Project;

and

BE IT FURTHER RESOLVED that the Task Force is also requested to examine the feasibility of:

(1) Amending PHCA and the possible effects the amendments could have on Hawaii's ERISA exemption;

(2) Identifying or developing a process to ensure that any amendment to PHCA does not jeopardize Hawaii's ERISA exemption (e.g., having a federal agency review any proposed amendment and certifying that it will not result in Hawaii losing its ERISA exemption); or

(3) Repealing PHCA and recommending alternatives for its replacement;

and

BE IT FURTHER RESOLVED that PHCA Task Force is requested to submit a report of its findings and recommendations to the Legislature no later than November 30, 2002; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, Director of Labor and Industrial Relations, and the Insurance Commissioner.

Report Title:

Task force to examine the effectiveness of PHCA.