THE SENATE

S.R. NO.

69

TWENTY-THIRD LEGISLATURE, 2005

S.D. 1

STATE OF HAWAII

 
   


SENATE RESOLUTION

 

REQUESTING THE INSURANCE COMMISSIONER AND THE ATTORNEY GENERAL TO REVIEW CERTAIN CONCERNS and take direct action to investigate and, if appropriate, prosecute any actions found to be illegal REGARDING anti-competitive and MONOPOLISTIC BEHAVIOR and predatory pricing on the part oF HEALTH INSURERS, MUTUAL BENEFIT SOCIETIES, AND HEALTH MAINTENANCE ORGANIZATIONS IN HAWAII.

 

WHEREAS, there are general and specific concerns in Hawaii with regard to health plan competition and opportunities for predatory pricing; and

WHEREAS, the Legislature has heard claims and allegations including that:

(1) Risk pooling can be used as an anti-competitive tool in a market where there is one or a small number of health plans that enjoys a large market share;

(2) Risk pooling permits a health plan to price very aggressively in one segment of the market (the "competitive segment") and raise prices in another segment to subsidize the loss (the "subsidy segment"); however, this does not succeed when there is sufficient competition; and

(3) The problem can be controlled with regulation, either by forbidding risk pooling or requiring plans to report profits and costs by risk pools and imposing substantial sanctions for violations; and

WHEREAS, the Legislature has also heard general and specific allegations in Hawaii with regard to monopolistic behavior of health plans, including that:

(1) A health plan attempting to monopolize the market can reduce access to care and prevent potential competitors from entering the market by not treating all health care providers equally so that the plan can leverage out excess providers from the market;

(2) A health plan is able to favor certain health care providers by assisting them with various efficiencies and access to plan approvals and other benefits, while also obstructing other health care providers by increasing their costs of doing business;

(3) Health plans have discouraged health care providers from offering certain benefits that are otherwise covered; and

(4) A health plan can control specific health care provider specialties by hiring specialists and installing them in the market with an advantage over other competing health care provider specialist groups; and

WHEREAS, furthermore, there appear to be other general and specific allegations and concerns in Hawaii with regard to health plans' contracting practices with health care providers, including claims that health plans:

(1) Circumvent requirements for prompt payment by giving themselves the power to recover benefits paid through the utilization review process conducted sometimes years after benefits are paid;

(2) Use a take-it-or-leave-it contract with health care providers; and

(3) Support payment reversals and payment avoidance through various means; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2005, that the Insurance Commissioner and the Attorney General are requested to review the concerns enumerated in this measure and take direct action to investigate and, if appropriate, prosecute any actions found to be illegal regarding anti-competitive and monopolistic behavior and predatory pricing on the part of health insurers, mutual benefit societies, and health maintenance organizations in Hawaii; and

BE IT FURTHER RESOLVED that the Insurance Commissioner and the Attorney General are requested to report to the Legislature, no later than twenty days prior to the convening of the Regular Session of 2006, with respect to all concerns expressed in this measure, by specifically submitting drafts of any proposed legislation that would be necessary to rectify each concern raised, along with an explanation of the agencies' position as to the advisability, or lack thereof, of enacting each of the proposed legislative measures; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Insurance Commissioner, the Director of Commerce and Consumer Affairs, the Attorney General, the Director of Health, the Hawaii Independent Physicians Association, the Coalition for Health, the Hawaii Medical Services Association, the Employers' Chamber of Commerce, Kaiser Foundation Health Plan, and the Hawaii Association of Health Underwriters.

Report Title:

Insurance Commissioner/Attorney General; Action on Health Plans