STAND. COM. REP. NO.  242-14

 

Honolulu, Hawaii

                , 2014

 

RE:   H.B. No. 2525

      H.D. 1

 

 

 

 

Honorable Joseph M. Souki

Speaker, House of Representatives

Twenty-Seventh State Legislature

Regular Session of 2014

State of Hawaii

 

Sir:

 

     Your Committee on Health, to which was referred H.B. No. 2525 entitled:

 

"A BILL FOR AN ACT RELATING TO HEALTH INSURANCE RATES,"

 

begs leave to report as follows:

 

     The purpose of this measure is to require individual health insurance plans and small group plans to establish premium rates based upon pure community rating.

 

     The Community Alliance for Mental Health provided testimony in support of this measure.  The Department of Commerce and Consumer Affairs submitted testimony in opposition to the measure.  The Governor's Office of Healthcare Transformation and Hawaii Primary Care Association submitted comments.

 

     Among the many insurance market reforms in the federal Patient Protection and Affordable Care Act (PPACA) is the requirement for health insurance premium rates in the individual and small group markets to vary no more than a ratio of 3:1 based upon age.  Generally, this permits insurance premium rates for older insureds to be as much as three times the premium rates for younger insureds.  Your Committee finds that given the high percentage of older persons in Hawaii's population, this premium rate ratio will require older insureds to pay disproportionately high health insurance premiums.  Your Committee believes that a "pure" community rating, or a ratio of 1:1, would produce a more equitable balance of insurance premium rates across all age groups.

 

     Your Committee notes that the PPACA encourages states to seek innovative approaches to providing comprehensive affordable care.  Section 1332 of the PPACA allows states to seek innovation waivers from the United States Department of Health and Human Services from specific requirements relating to qualified health plans, health insurance exchanges, and certain premium subsidies.  Your Committee also notes that Hawaii has a long history of finding novel and effective approaches to providing access to health insurance for its uninsured and underinsured persons of all income levels.  Accordingly, your Committee believes that Hawaii should investigate the feasibility of alternatives to certain requirements of the PPACA that are equally affordable and comprehensive but tailored to Hawaii's unique insurance market.

 

     Your Committee has amended this measure by:

    

(1)  Establishing a state innovation waiver task force within the Office of the Governor that shall:

 

(A)  Examine the feasibility of alternatives to certain health reforms in the PPACA;

 

(B)  Develop a plan for applying for a state innovation waiver that meets the requirements of the PPACA, including options that offer innovations to the State's Medicaid program;

 

(C)  Examine the feasibility of obtaining an exemption to or waiver from the allowable age-based variances in premium rates;

 

(D)  Prepare a draft application for a state innovation waiver, to take effect for plan years beginning after January 1, 2017;

 

(E)  Report its findings to the Legislature no later than twenty days prior to the convening of the Regular Session of 2016; and

 

(F)  Be dissolved on June 30, 2017;

 

(2)  Appropriating an unspecified amount for the operations of the state innovation waiver task force; and

 

(3)  Changing the effective date to July 1, 2050, to facilitate further discussion on the measure.

 

     As affirmed by the record of votes of the members of your Committee on Health that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 2525, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 2525, H.D. 1, and be referred to the Committee on Consumer Protection & Commerce.

 

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

 

 

 

 

____________________________

DELLA AU BELATTI, Chair