STAND. COM. REP. NO. 1244

Honolulu, Hawaii

, 2001

RE: H.B. No. 568

H.D. 2

S.D. 1

 

 

Honorable Robert Bunda

President of the Senate

Twenty-First State Legislature

Regular Session of 2001

State of Hawaii

Sir:

Your Committee on Labor, to which was referred H.B. No. 568, H.D. 2, entitled:

"A BILL FOR AN ACT RELATING TO PUBLIC EMPLOYEE HEALTH BENEFITS,"

begs leave to report as follows:

The purpose of this measure is to create a new governance structure for public employees' health benefits by establishing an Employer-Union Health Benefit Trust Fund, as a system and as a fund, to replace the Hawaii Public Employees Health Fund system and trust fund.

The Department of Budget and Finance testified in support of this measure. The Hawaii Government Employees Association supported the passage of the measure with reservations. The Hawaii Government Employees Association, Retirees Unit voiced no objection to the measure; provided that health care needs are provided with dignity. The Hawaii Public Employees Health Fund Board of Trustees, the City and County of Honolulu Department of Human Resources, and the Office of Information Practices took no position. The Hawaii State Teachers Association, the Hawaii State Teachers Association - Retired, the Oahu Retired Teachers Association, and the United Public Workers, AFSCME, testified in opposition to the measure.

Your Committee finds that the measure provides for a ten-member Board of Trustees, five representing employee organizations, including one retiree, and five members representing public employers, including the Directors of Human Resources Development and Finance and one representative of the counties on a rotational basis. The board is required to provide quality health and other benefit plans at a cost affordable to both public employers and public employees.

The measure gives the new Board of Trustees essentially the same duties and responsibilities as those given to the existing Board of Trustees of the Public Employees Health Fund. However, this measure grants the new board several new powers, including investing money in certain ways and purchasing certain securities and other instruments, hiring an administrator and staff exempt from civil service laws, contracting for financial audits of the fund and carriers, and retaining auditors, actuaries, investment firms and managers, benefit plan consultants, or other professional advisors.

The measure further provides extensive procedures for decision making by the board, including steps to take in event of a deadlock on a vote that includes the use of an impartial umpire and the constitution of a board of arbitration.

The measure also creates the Employer-Union Health Benefit Trust Fund to pay for employee health benefits. The State and the counties are required to make monthly contributions to the new trust fund in a specified dollar amount that does not exceed the actual cost of the benefit plan. The measure requires the public employers to pay unspecified monthly "base amounts" for various retirees with varying years of service for various benefits, based on participation in Medicare part B self, two-party family, and three-party or more family plans, and for retirees without Medicare part B plans. The base amounts are legislatively set and annually adjusted by the percentage increase in Medicare part B premiums. Public employer contributions for active employees do not involve base amounts but must be in a specified dollar amount that is determined through collective bargaining or under Chapter 89C, Hawaii Revised Statutes, whichever is appropriate. The amount contributed by public employers is not to exceed the actual cost of the benefit plan provided.

The measure further transfers positions and personnel, and appropriations and assets, etc., of the existing Public Employees Health Fund to the new Employer-Union Health Benefit Trust Fund on July 1, 2003. However, the Governor is required to appoint the ten members of the new board prior to December 29, 2001. The existing board may extend current benefit plans until July 1, 2003, and may hire an administrator of the Public Employees Health Fund exempt from civil service laws and contract for financial audits. Existing rules are to remain in effect until the new board adopts rules. The measure also makes a blank appropriation for transition expenses including salary for the new staff.

Finally, the measure takes effect on July 1, 2010.

Your Committee has amended this measure by:

(1) Enabling the board of the Employer-Union Trust Fund to hold meetings without notice if all trustees agree to hold a meeting;

(2) Changing the effective date to July 1, 2050, for the purpose of continued discussion; and

(3) Making numerous technical, nonsubstantive amendments for the 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 H.B. No. 568, H.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 568, H.D. 2, 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,

____________________________

BOB NAKATA, Chair