House and Senate negotiators yesterday adopted a proposal that would allow state regulation of health insurance rates. Health rate bill
sent for final votesBy B.J. Reyes
Associated PressThe bill would prohibit excessive, inadequate or unfairly discriminatory rates and require health care insurers to submit rate filings for approval by the state insurance commissioner.
A House-Senate conference committee added two amendments to House Bill 1761 before approving it. Lawmakers added a sunset provision for June 2006 so the legislation would be reviewed again.
And, at the request of Hawaii Medical Association, the group representing the state's doctors, a second amendment was added to clarify the word "rate" as it is used in the bill to refer to insurance premiums and not rates in the context of physician reimbursement.
The bill now goes to the full House and Senate. A final vote will likely occur next week.
Supporters, including Gov. Ben Cayetano, say regulation is needed because only two companies provide health insurance in the state.
The state Insurance Commissioner Wayne Metcalf, who had lobbied for passage of the bill, said he is now "cautiously optimistic" about the bill's chances for passage.
"I congratulate the House and Senate conferees on the political courage they displayed passing a bill that's going to benefit businesses and working families," he said.
"It provides basic fairness," said Richard Miller, spokesman for a coalition group called Citizens Against Health Care Monopolies. "When you require businesses to buy insurance ... then the state has an obligation to make sure that the premiums are affordable and fair, particularly when the major operators have a near monopoly."
Until a few years ago, there were several health plans in competition, but that has since been reduced to just two -- Hawaii Medical Service Association as a preferred provider organization and Kaiser Permanente, a health maintenance organization.
Opponents argue that enough regulation exists and the measure would put too much power in the hands of a state appointee.
"Essentially, now what you'll have is a bureaucratic, state-run process basically running health plans in the state," said Jennifer Diesman, a lobbyist for Hawaii Medical Service Association, the state's largest insurer.
"They'll be setting and controlling all the processes, business operations and rates that the health plan creates in the community," she added. "We don't really think a state agency with a political appointee really has that knowledge and ability."
'We really need to monitor it to insure that it doesn't result in any negative consequences for consumers and other businesses in Hawaii," said Sen. Ron Menor, D-Wheeler-Mililani.
However, Menor added he believes the proposal is likely to bring down premiums.
"If (the state insurance commissioner) determines that the rates being proposed by the health insurers are too high he would have the power to reduce those rates just as he has the same kind of authority with respect to auto insurance ... and other areas where insurance rates have come down," he said.
Lyn Danninger contributed to this report.