HOUSE OF REPRESENTATIVES

H.B. NO.

2529

TWENTY-SEVENTH LEGISLATURE, 2014

H.D. 2

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO HEALTH.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


     SECTION 1.  Health insurance exchanges are a central component of the federal Patient Protection and Affordable Care Act, and the federal act gives states broad discretion in establishing the structure and governance of their own exchanges.  The legislature finds that the Hawaii health connector was established by Act 205, Session Laws of Hawaii 2011, as Hawaii's health insurance exchange and was charged with the responsibility of implementing applicable parts of the federal act.

     The successful and efficient operation of the Hawaii health connector is essential for the State, health insurers, and insured persons in Hawaii to comply with the new requirements of the federal act.  The legislature also finds that the Hawaii health connector was established as a private nonprofit entity, rather than a state agency, to provide the connector with a certain degree of freedom and autonomy in establishing and operating the State's health insurance exchange.

     However, the legislature believes that evolving federal health care regulations and the need for greater transparency and oversight over Hawaii's health insurance exchange necessitate that the State revise the structure of the Hawaii health connector's board of directors.  In addition, the legislature finds that the Hawaii health connector should engage with advisory groups that represent various stakeholder interests and allow for their input and recommendations for the activities of the connector.  The legislature also believes that it should take a proactive oversight role to monitor the connector and review its financial and operational plans.

     The Patient Protection and Affordable Care Act mandates health insurance exchanges to be self-sustaining beginning in January 2015.  The legislature further recognizes that the long-term financial sustainability of the Hawaii health connector must be facilitated in a way that promotes competition and ensures equity among the competitors.  The legislature finds that a sustainability fee on insurers is an appropriate financing method that will strike a proper balance by promoting competition, facilitating a self-sustaining health insurance exchange market, and maintaining reasonable health insurance rates.

     The purpose of this Act is to:

     (1)  Provide for greater transparency, stakeholder engagement, and legislative involvement in the activities of the Hawaii health connector; and

     (2)  Provide for the long-term sustainability of the Hawaii health connector by authorizing the insurance commissioner to assess a fee on all issuers selling plans, both inside and outside of the connector.

     SECTION 2.  Chapter 435H, Hawaii Revised Statutes, is amended by adding ­­­seven new sections to be appropriately designated and to read as follows:

     "§435H-A  Consumer, patient, business, and health care advisory group.  The board shall establish a consumer, patient, business, and health care advisory group to provide input and recommendations to the board.  The advisory group shall reflect geographic diversity and a diversity of interests.  Members shall include individuals with education, training, or professional experience in the fields of consumer advocacy, patient advocacy, public health, health care provision, economics, financial management, risk management, and small business.  Members of the advisory group shall serve in an advisory capacity only and shall not be considered members of the board.  Members shall not be compensated but may be reimbursed for necessary expenses incurred in the performance of their duties.

     §435H-B  Health insurers advisory group.  The board shall establish a health insurers advisory group to provide input and recommendations to the board.  Members shall consist of representatives of the insurers that offer qualified plans or qualified dental plans through the connector.  Members of the advisory group shall serve in an advisory capacity only and shall not be considered members of the board; provided that two advisory group members selected from among the advisory group membership shall serve as nonvoting members of the board.  Members of the advisory group shall not be compensated but may be reimbursed for necessary expenses incurred in the performance of their duties.

§435H-C  Insurance producers advisory group.  The board shall establish an insurance producers advisory group to provide input and recommendations to the board.  The advisory group shall reflect geographic diversity and members shall include insurance agents and brokers that sell qualified plans through the connector.  Members of the advisory group shall serve in an advisory capacity only and shall not be considered members of the board.  Members shall not be compensated but may be reimbursed for necessary expenses incurred in the performance of their duties.

     §435H-D  Connector legislative oversight committee.  (a)  There is created the connector legislative oversight committee, which shall consist of the following members:

     (1)  Two members of the house standing committee on consumer protection and commerce;

     (2)  Two members of the house standing committee on health;

     (3)  Two members of the house standing committee on finance;

     (4)  Two members of the senate standing committee on commerce and consumer protection;

     (5)  Two members of the senate standing committee on health; and

     (6)  Two members of the senate standing committee on ways and means.

     Members of the connector legislative oversight committee shall be appointed by the senate president and the speaker of the house of representatives, respectively, provided that one appointment from each house shall be a member of the minority party selected by the minority leader.

     (b)  The committee shall select co-chairs from among its members and shall meet at the call of the co-chairs as often as is needed.

     (c)  The committee shall promote and protect the interests of the residents of Hawaii by reviewing the financial and operational plans of the connector and providing input and recommendations to the board.

     (d)  The committee shall annually review the sustainability plan that is submitted by the board pursuant to section 435H-F  and shall recommend to the commissioner the amount of the Hawaii health connector universal federally mandated sustainability fee that shall be assessed in the upcoming fiscal year.

     §435H-E  Agents and brokers.  Certified insurance agents and brokers may enroll individuals and employers in qualified plans through the connector and assist individuals and employers in applying for applicable premium tax credits and cost-sharing reductions for which they may be eligible.  The commissioner shall adopt rules for certifying insurance agents and brokers pursuant to this section; provided that the rules shall include qualifications and educational requirements for agents and brokers that comply with the federal act.

     §435H-F  Hawaii health connector universal federally mandated sustainability fee; annual sustainability plan.  (a)  No later than twenty days prior to the convening of each regular session of the legislature, the board shall submit a sustainability plan to the connector legislative oversight committee and the commissioner that specifies the amount of funding required to finance the operations and cash reserve of the connector for each ensuing fiscal year beginning on July 1; provided that the balance of the cash reserve does not exceed the value of the cost of three months of administering and operating the connector. 

     (b)  The sustainability plan submitted pursuant to subsection (a) shall include a detailed itemized budget based upon zero-based budgeting principles for the upcoming fiscal year and a detailed justification for the release of moneys from the Hawaii health connector sustainability special fund pursuant to section 435H-G.  For the purposes of formulating the budget, "zero-based budgeting principles" means that the Hawaii health connector shall justify all projected allocations and expenditures, starting with an initial balance of zero dollars to spend.

     (c)  Any other provision notwithstanding, beginning on July 1, 2015, and on each July 1 thereafter, the commissioner, taking into account the recommendation of the connector legislative oversight committee, may assess upon and collect from each insurer the Hawaii health connector universal federally mandated sustainability fee.  The fee shall be assessed upon a pro rata basis, based upon the number of individuals covered by each insurer on the preceding December 31, excluding individuals covered under a medicaid plan pursuant to Title XIX of the Social Security Act, 42 U.S.C. section 1396 et seq.  At the discretion of the commissioner, the fee or a percentage thereof may be assessed upon and collected from each dental insurer subject to chapter 432G.  The total of all revenues collected from the fee shall not exceed the amount of funding required to finance the operations and cash reserve of the connector as specified in subsection (a).

     §435H-G  Hawaii health connector sustainability special fund.  (a)  There is established the Hawaii health connector sustainability special fund, into which shall be deposited:

     (1)  Hawaii health connector universal federally mandated sustainability fee revenues collected pursuant to section 435H-F; and

     (2)  Any appropriations that may be made by the legislature to the fund.

     Moneys in the Hawaii health connector sustainability special fund shall not be considered part of the general fund.

     (b)  Moneys in the Hawaii health connector sustainability special fund are to be expended by the commissioner only as provided in this subsection.  Moneys in the special fund shall be transferred to the connector according to procedures established by the commissioner and shall only be used for the administration, operations, and prudent cash management of the connector.

     (c)  The Hawaii health connector sustainability special fund shall be audited annually by an independent auditor retained by the connector.  The auditor's report of each annual audit shall be submitted to the commissioner and the connector legislative oversight committee not later than thirty days from the date the audit report is received by the connector."

     SECTION 3.  Section 435H-2, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

     "(a)  There is established the Hawaii health insurance exchange to be known as the Hawaii health connector.  The connector shall be a nonprofit unincorporated entity.  The connector shall be an instrumentality of the State; provided that the debts and liabilities of the connector shall not constitute the debts and liabilities of the State; provided further that the connector shall not be considered an agency of the State and shall not be subject to laws or rules regulating rulemaking, public employment, or public procurement.  [The connector shall be a Hawaii nonprofit corporation organized and governed pursuant to chapter 414D, the Hawaii nonprofit corporations act.]

     (b)  The purposes of the connector shall include:

     (1)  Facilitating the purchase and sale of qualified plans and qualified dental plans;

     (2)  Connecting consumers to the information necessary to make informed health care choices; [and]

     (3)  Enabling consumers to purchase coverage and manage health and dental plans electronically[.]; and

     (4)  Performing any and all other duties required of a health insurance exchange pursuant to the federal act."

     SECTION 4.  Section 435H-3, Hawaii Revised Statutes, is amended to read as follows:

     "[[]§435H-3[]]  Funding.  (a)  The connector may receive contributions, grants, endowments, fees, or gifts in cash or otherwise from public and private sources including corporations, businesses, foundations, governments, individuals, and other sources subject to rules adopted by the board.  The State may appropriate moneys to the connector.  As required by section 1311(d)(5)(A) of the Federal Act, the connector shall be self-sustaining by January 1, 2015, and may charge assessments or user fees to participating health and dental carriers, or may otherwise generate funding to support its operations.  Moneys received by or under the supervision of the connector shall not be placed into the state treasury and the State shall not administer any moneys of the connector nor be responsible for the financial operations or solvency of the connector[.] except as provided in section 435H-G.

     (b)  In addition to any other means of generating revenue pursuant to subsection (a), the connector may charge fees for displaying advertisements for ancillary services on the connector's website."

     SECTION 5.  Section 435H-4, Hawaii Revised Statutes, is amended by amending subsections (a) through (c) to read as follows:

     "(a)  The [Hawaii health] connector shall be [a nonprofit entity] governed by a board of directors that shall comprise [fifteen] twelve members as follows:

     (1)  The director of commerce and consumer affairs or the director's designee, who shall be an ex officio nonvoting member;

     (2)  The director of human services or the director's designee, who shall be an ex officio nonvoting member;

     (3)  The healthcare transformation coordinator, who shall be an ex officio nonvoting member;

     (4)  Three members who shall be appointed by the governor [and with the advice and consent of the senate pursuant to section 26‑34; provided that the governor shall submit nominations to the senate for advice and consent no later than February 1, 2012; and provided further that the senate shall timely advise and consent to nominations for terms to begin July 1, 2012.  Members of the interim board shall be eligible for appointment to the board.];

     (5)  Two members who shall be appointed by the president of the senate;

     (6)  Two members who shall be appointed by the speaker of the house of representatives; and

     (7)  Two members who shall be appointed by the health insurers advisory group from among its members, who shall be nonvoting members.

The board shall elect one of its members as the chairperson of the board.  The board, by majority vote, may remove or suspend for cause any member after due notice and public hearing.

     (b)  The membership of the board shall reflect geographic diversity and the diverse interests of stakeholders including consumers, employers, insurers, and dental benefit providers.  Each person appointed to the board shall have education, training, or professional experience in at least one of the following areas:

     (1)  Health care policy;

     (2)  Health benefits plan administration, including medicaid administration;

     (3)  Health insurance;

     (4)  Health care financing and purchasing;

     (5)  Health care delivery;

     (6)  Information technology; or

     (7)  Economics and actuarial science.

     In making appointments, the appointing authorities shall consider the background and expertise of all members of the board and the geographic, socioeconomic, and other characteristics of the State, so that the board's composition reflects a diversity of expertise, skills, and background relevant to the State; provided that members appointed pursuant to subsection (a)(4) through (7) shall not be employees of the State.

     [The director of commerce and consumer affairs or the director's designee, the director of health or the director's designee, the director of human services or the director's designee, and the director of labor and industrial relations or the director's designee shall be ex officio, voting members of the board.

     The director of commerce and consumer affairs, the director of health, the director of human services, and the director of labor and industrial relations may select a designee for a specified meeting or meetings.  Such selection of the designee shall be submitted in writing to the board of directors prior to or at the meeting in which the designee will serve.]

     (c)  Board members shall serve staggered terms and the interim board shall recommend an appropriate schedule for staggered terms; provided that this subsection shall not apply to [ex officio members,] members appointed pursuant to subsection (a)(1) through (3), who shall serve during their [entire] term of office."

     SECTION 6.  In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

     SECTION 7.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 8.  This Act shall take effect on July 1, 2112.


 


 

Report Title:

Health; Hawaii Health Connector; Sustainability Fee

 

Description:

Reduces the membership of the Connector board of directors from fifteen to twelve members and changes the composition and voting status of the board.  Creates the consumer, patient, business, and health care advisory group; health insurers advisory group; and the insurance producers advisory group to advise the Connector board of directors.  Creates the Connector legislative oversight committee to review the financial and operational plans of the Connector.  Establishes a sustainability fee to support operations of the Connector and establishes a special fund.  Effective 07/01/2112.  (HD2)

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.