Public Employees Health Fund

Requires the Public Employees Health Fund Board of Trusteesto
implement the following for the benefit plan year beginning July
1, 2001: (1) Preferred Provider Organization Plans (PPO) for
medical benefits; (2) Medicare+Choice Plans; (3) drug benefit
plans; and (4) revise the methodology for computing out-of-pocket
costs to ensure comparability for all employee beneficiaries.
(HB2449 HD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  In a recent audit of the Hawaii public employees
 2 health fund, the legislative auditor found that from fiscal year
 3 1995-96 to fiscal year 1997-98:
 4      (1)  Employer contributions rose from approximately
 5           $235,300,000 to $262,600,000;
 6      (2)  The cost to provide health benefits for active
 7           employees and retirees and post-retirement health
 8           benefit liability increased dramatically over the past
 9           decade; and 
10      (3)  As of July 1, 1998, the state's and counties' accrued
11           liability for future retiree health benefits under
12           current plans is estimated at $4,500,000,000. 
13 By the year 2013, the legislative auditor's actuary estimated
14 liability for post-retirement health benefits to be
15 $11,400,000,000.  The annual pay-as-you-go employer costs for
16 retiree benefits would be $455,900,000 in the year 2013.
17      Health benefits have become a significant cost to public
18 employers and action is required to contain these rising health
19 fund benefit costs.

Page 2                                                     2449
                                     H.B. NO.           H.D. 1

 1      SECTION 2.  For the benefit plan year commencing July 1,
 2 2001, the board of trustees for the public employees health fund
 3 shall:
 4      (1)  Not enter into contracts for or offer the basic major
 5           medical plan;
 6      (2)  Enter into contracts for and offer Preferred Provider
 7           Organization Plans (PPO) for medical benefits for
 8           actives and retirees ineligible for medicare;
 9      (3)  Enter into contracts for Medicare+Choice Plans for
10           medicare-eligible retirees and their medicare-eligible
11           spouses; medicare-eligible retirees with medicare-
12           ineligible dependent beneficiaries shall continue to be
13           offered the Medicare Supplemental Plan pursuant to
14           section 87-27, Hawaii Revised Statutes;
15      (4)  Enter into contracts for drug benefit plans with
16           premiums based on inclusion of a closed formulary for
17           federally approved health maintenance organization
18           plans and a co-payment plus a differential for non-
19           preferred brand name drugs based on an open formulary
20           for service benefit plans; and
21      (5)  Revise the methodology to compute carrier payments
22           under service benefit medicare supplemental plans to no
23           more than what the carrier would pay under service
24           benefit non-medicare retiree plans.

Page 3                                                     2449
                                     H.B. NO.           H.D. 1

 1      SECTION 3.  The board shall continue to consider strategies
 2 or other alternatives to control the rising cost of providing
 3 health benefits.
 4      SECTION 4.  This Act shall take effect on July 1, 2005.