HOUSE OF REPRESENTATIVES

H.C.R. NO.

139

TWENTY-FIRST LEGISLATURE, 2002

H.D. 1

STATE OF HAWAII

 
   


HOUSE CONCURRENT

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 are seriously threatening 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), last year; and

WHEREAS, Act 88 created the Hawaii Employer-Union Health Benefits Trust Fund (Trust Fund), which is to be implemented starting July 1, 2003; and

WHEREAS, under Act 88, all public employees and retirees will be grouped into one large pool of consumers; and

WHEREAS, under section 501(c)(9) of the Internal Revenue Code, a tax-exempt Voluntary Employees' Beneficiary Association (VEBA) can be established to provide life, sick, 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 not fully controlled by the State, even though a major portion of the moneys in a VEBA may come from the State, but rather, VEBAs are subject to federal requirements under the Internal Revenue Code and the Employees Retirement Income Securities Act; and

WHEREAS, VEBAs currently qualify as tax-exempt entities under section 501(c)(9); and

WHEREAS, by maintaining both VEBAs and the newly-created Trust Fund, duplication of services may exist, adding additional unforeseen costs to the State; and

WHEREAS, beginning in 2003, all public employee unions will be involved in collective bargaining over employer contributions for employee health insurance costs; and

BE IT RESOLVED by the House of Representatives of the Twenty-first Legislature of the State of Hawaii, Regular Session of 2002, the Senate concurring, that the Office of the Auditor (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 include in its report, the ramifications of the coexistence of both a VEBA and the Trust Fund, and whether this is a feasible option; and

BE IT FURTHER RESOLVED that the Office of 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 2003; and

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

Report Title:

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