HOUSE OF REPRESENTATIVES

H.R. NO.

56

TWENTY-FOURTH LEGISLATURE, 2007

 

STATE OF HAWAII

 

 

 

 

 

HOUSE RESOLUTION

 

 

Requesting the auditor to conduct a study on voluntary employees' beneficiary associations to determine their feasibility as viable health insurance plans for public employees, retirees, and their dependents.

 

 

 


     WHEREAS, rising health care costs, inflation, and an aging workforce have seriously threatened the State's fiscal ability to provide health benefits to Hawaii's approximately 83,000 active and retired public employees, as well as their dependents; and

 

     WHEREAS, to safeguard the strength of the public employees' health benefits system, the Legislature passed Act 88, Session Laws of Hawaii 2001 (Act 88), which created the Hawaii Employer-Union Health Benefits Trust Fund (Trust Fund); and

 

     WHEREAS, with the goal of obtaining lower insurance rates with benefits equal to or better than the community standard, the Trust Fund grouped all public employees and retirees into one large pool of consumers, thereby increasing the attractiveness of the state system to insurers and providing the State with greater bargaining power; and

 

     WHEREAS, under Section 501(c)(9) of the Internal Revenue Code (IRC), a tax-exempt Voluntary Employees' Beneficiary Association (VEBA) can be established to provide life, accident, medical, or other benefits to members of the VEBA or their dependents; and

 

WHEREAS, proponents of VEBAs claim that by having a smaller consumer pool and tailor-made benefit packages, health care costs can be better controlled; and

 

     WHEREAS, the Hawaii State Teachers Association currently has a VEBA Trust, which offers union members health insurance benefits; and


     WHEREAS, VEBAs are established pursuant to Act 245, Session Laws of Hawaii 2005, and controlled by the State, and are subject to federal requirements under the IRC and the Employees Retirement Income Securities Act; and

 

     WHEREAS, by maintaining both VEBAs and the newly-created Trust Fund, duplication of administrative services may occur, creating additional costs for the State; and

 

     WHEREAS, if VEBAs are proven to be cost-effective for the State, it may be beneficial for the State to allow other employee representatives to establish their own VEBAs, thereby further reducing costs to employees and the State while increasing benefits for employees; now, therefore,

 

     BE IT RESOLVED by the House of Representatives of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2007, that the Auditor is requested to conduct a study on VEBAs to determine their feasibility as viable health insurance plans for public employees, retirees, and their dependents; and

 

     BE IT FURTHER RESOLVED that the Auditor is requested to determine the costs and benefits of VEBAs, including the VEBA currently operated by the Hawaii State Teachers Association, and whether it would be beneficial for the State to establish VEBAs for its bargaining units and dissolve the Trust Fund; and

 

     BE IT FURTHER RESOLVED that the Auditor is requested to include in its report the ramifications of the coexistence of both a VEBA and the Trust Fund and whether such coexistence is a feasible option; and

 

     BE IT FURTHER RESOLVED that the Auditor submit its report, findings, and recommendations to the Legislature no later than 20 days prior to the convening of the Regular Session of 2008; and


     BE IT FURTHER RESOLVED that a certified copy of this Resolution be transmitted to the Auditor and the Chair of the Board of Trustees of the Hawaii Employer-Union Health Benefits Trust Fund and the President of the Hawaii State Teachers Association.

 

 

 

 

OFFERED BY:

_____________________________

 

 

Report Title: 

Requesting the Auditor to conduct a study on VEBAs and their feasibility as viable health insurance plans.