STAND. COM. REP. 2492

Honolulu, Hawaii

, 2004

RE: S.B. No. 3227

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Labor, to which was referred S.B. No. 3227 entitled:

"A BILL FOR AN ACT RELATING TO VOLUNTARY EMPLOYEES' BENEFICIARY ASSOCIATION TRUSTS,"

begs leave to report as follows:

The purpose of this measure is to authorize the establishment of a five-year voluntary employees' beneficiary association (VEBA) trust pilot program that allows public employee organizations to establish a VEBA trust to provide health benefits to their members.

Specifically, this bill:

(1) Exempts employees covered by VEBA trusts from mandatory participation in the Hawaii Employer-Union Health Benefits Trust Fund (EUTF) pursuant to chapter 87A, Hawaii Revised Statutes;

(2) Allows public employee organizations that establish VEBA trusts to provide health benefits to members both during their employment and throughout their retirement years; and

(3) Provides current retirees, who were members of a public employee organization prior to their retirement, with a one-time option of electing to participate in either the Hawaii EUTF or a VEBA trust established by their public employee organization.

Testimony in support of this measure was submitted by the Hawaii State Teachers Association, the Hawaii State Teachers Association-Retired, the Hawaii State Teachers Association Voluntary Employees' Beneficiary Association Trust, and thirty-nine individuals.

Testimony in opposition to this measure was submitted by the Department of Budget and Finance.

Your Committee finds that with the escalating cost of medical coverage, alternate methods for the provision of health benefits to public employees must be explored and analyzed. Your Committee further finds that a pilot program for the establishment of VEBA trusts will provide valuable insight to the viability of VEBA trusts as a cost-savings mechanism for the State. Your Committee determines that information provided indicates that VEBA trusts will provide public employees with an option for health care coverage, apart from participation in the EUTF, without any increase in cost to the State or the various counties. Your Committee believes that this measure will encourage increased competition and result in lower premium rates for public employee health insurance.

Accordingly, your Committee has amended this measure by:

(1) Clarifying that upon repeal of the Act, amendments deleting references to the public employees health fund that were replaced by references to the employer-union health benefits trust fund shall be retained; and

(2) Making technical, nonsubstantive amendments for purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Labor that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 3227, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 3227, S.D. 1, and be referred to the Committee on Ways and Means.

Respectfully submitted on behalf of the members of the Committee on Labor,

____________________________

BRIAN KANNO, Chair