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Wednesday, May 1, 2002


Legislature 2002


Health insurance rate
oversight bill clears Legislature


By Lyn Danninger
ldanninger@starbulletin.com

The bill that would give the state Insurance Commissioner greater oversight of health insurers' rate-making activities was approved by both the House and Senate last night.

House representatives voted 31 to 20 in favor of HB 1761. The Senate approved the measure by a vote of 22 to 3.

Although two amendments had been added by a House-Senate conference committee last week, the bill remained largely in its original form. Lawmakers added a sunset provision of June 2006 and, at the request of the Hawaii Medical Association, added language to clarify the word "rate" to refer exclusively to insurance premiums and not rates in the context of physician reimbursement.

Under the terms of the law, health insurers will have to submit rate filings to the state's Insurance Division for review and approval.

During last night's legislative session, lawmakers spoke for more than an hour on the merits of the bill.

Rep. Ed Case, D-Manoa, who supported the bill, said while he is no fan of additional government regulation, a dwindling number of health insurance choices make it necessary for government to intervene.

"There is no competition, that's why we are standing here today.

"I think it's a fair public policy call," he said.

But Rep. Chris Halford, R-Makena, blamed existing health care laws, such as the state's Prepaid Health Care Act, for helping to create the problem of little health insurer competition in Hawaii.

Health insurers had lobbied hard against the bill.

"I have no expectation that rate regulation will lower health care costs or premiums. In the next three years we will have a chance to evaluate whether we need regulation at all," said Chris Pablo, Kaiser Permanente's Director of Government Affairs, in reaction to the vote.

At Hawaii Medical Service Association, the state's largest health insurer, Vice President Cliff Cisco was also disappointed at the outcome.

"We continue to believe that the bill was unnecessary but it passed and we'll live with the results. Our concern, as we said many times, is in the long term, whether some future Insurance Commissioner will use this bill to negatively impact the financial stability of HMSA," he said.

The state's Insurance Commissioner, Wayne Metcalf, applauded legislators efforts.

"I'm very pleased ... (The measure) will ensure fairness, balance and sunshine are brought to the rate determination process," he said.

"Whoever the commissioner may be in the future, the rate review process will work as intended. In contrast to the present situation, any health plan that disagrees with how rates are set has full due process guaranteed in the bill," he said.

The bill, which becomes effective Jan. 1, 2003, now goes to Gov. Ben Cayetano, who has indicated he would sign the measure.



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Testimony by email: testimony@capitol.hawaii.gov
Include in the email the committee name; bill number;
date, time and place of the hearing; and number of copies
(as listed on the hearing notice.) For more information,
see http://www.hawaii.gov/lrb/par
or call 587-0478.



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