STAND. COM. REP. NO. 717

                                 Honolulu, Hawaii
                                                   , 1999

                                 RE: H.B. No. 169
                                     H.D. 2




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 1999
State of Hawaii

Sir:

     Your Committee on Consumer Protection and Commerce, to which
was referred H.B. No. 169, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO LONG-TERM CARE,"

begs leave to report as follows:

     The purpose of this bill is two-fold: to increase the
availability of private long-term care (LTC) insurance policies
by requiring employers to offer long-term care insurance to their
employees, and to expand regulatory authority over long-term care
insurance.

     Testimony supporting this measure was received from the
Hawaii State Commission on the Status of Women, State of Hawaii
Executive Office on Aging, AARP, Hawaii State Retired Teachers,
National Association of Retired Federal Employees, and the Policy
Advisory Board for Elder Affairs.  

     The Department of Commerce and Consumer Affairs (DCCA)
testified that it was working on a draft of this bill that would
incorporate most of the National Association of Insurance
Commissioners (NAIC) Long Term Care Insurance Model Regulations
in statutory format.  DCCA encouraged adoption of those
provisions of the NAIC Model Regulations that afford consumers
greater protections, but also explained that the NAIC Model Act
does not provide equivalent coverages to the bill in some
instances, one example of which is the lack of any minimum
coverages mandate in the NAIC Model Act. 


 
 
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      Healthcare Association of Hawaii, Hawaiian Electric Company
(HECO), Hawaii State Association of Life Underwriters (HSALU),
and Hawaii Medical Services Association (HMSA) expressed concerns
about various specific provisions of the bill.

      The American Council of Life Insurance (ACLI) and the ILWU
Local 142 opposed the bill.  ACLI, HSALU, like HECO, raised the
issue of ERISA preemption of those provisions relating to
employer mandated coverage.  ILWU, ACLI, and Hawaii Coalition for
Affordable Long Term Care warned that mandated coverages would
become too costly for most people to afford, undercutting the
intent of this bill.

     Your Committee appreciates the complexities of the issues
relating to mandated long-term care insurance coverage, and is
well aware that there is much more work that must go into
developing a program as comprehensive as this bill intends to
address.  Your committee also recognizes that Hawaii is
experiencing dramatic growth in its aging population, which is
projected to increase significantly through the next decade or
more.  Affordable long-term care will become increasingly
important for our citizens, and the predicted fiscal and social
reverberations require our unrelenting effort to develop
solutions using many different approaches.

      Upon further consideration, your Committee has amended the
bill, following the draft developed by the Insurance
Commissioner, which incorporates most of the NAIC Model
Regulations, including the provisions that increase protection
for consumers.  Your Committee respectfully requests that
subsequent committees further consider the many issues raised,
including ERISA preemption and cost implications of the coverages
proposed in this bill.

     The following briefly describes the ten major parts of the
amended bill, only one part of which reflects no substantive
change from the former bill:

     (1)  Part I - No substantive changes have been made.

     (2)  Part II - Contains state policy provisions.  Changes
          were made to clarify eligibility for the long-term care
          insurance mandate.  This will allow the Legislature to
          distinguish NAIC provisions from the real policy
          issues.

     (3)  Part III - Contains consumer protection provisions that
          HIPAA requires in a long term care insurance contract

 
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          for tax qualifications.  Also adds 16 new provisions to
          article 10A of Chapter 431, Hawaii Revised Statutes.

     (4)  Part IV  - Contains other consumer protection
          provisions that have been adopted by the NAIC and are
          found in the 1998 version of the model requlations.  It
          also contains seven provisions which are not referenced
          in the Health Insurance Portability and Accountability
          Act of 1996 (HIPAA) but are model regulations.

     (5)  Part V - Contains HIPAA compliance provisions for
          insurers.  Contains eight provisions that are required
          by HIPAA for tax purpose.

     (6)  Part VI - Contains other compliance provisions, not
          required by insurers and provisions contained in the
          original bill that amend current statutory language.
          Three provisions are contained here that are not
          required by HIPAA.

     (7)  Part VII - Contains provisions relating to regulatory
          funding.

     (8)  Part VIII - Contains funding for an actuarial study on
          long-term care insurance.  

     (9)  Part IX - Contains funding to continue the Joint
          Legislative Task Force.

     As affirmed by the record of votes of the members of your
Committee on Consumer Protection and Commerce that is attached to
this report, your Committee concurs with the intent and purpose
of H.B. No. 169, H.D. 1, as amended herein, and recommends that
it be referred to the Committee on Finance, in the form attached
hereto as H.B. No. 169, H.D. 2.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Consumer
                                   Protection and Commerce,



                                   ______________________________
                                   RON MENOR, Chair