Last year, the state Legislature adopted a law to combine 90,000 active and retired state employees into a single, less-costly health system to be implemented July 1, 2003. New state health plan
may not be ready in timeState employees could lose
insurance without prompt
action from the stateBy Lyn Danninger
ldanninger@starbulletin.comWith a little more than nine months until its start, the Hawaii Employer-Union Benefits Trust Fund may have trouble being ready in time.
Plan offerings, benefits and the cost to employees have yet to be determined.
As part of the legislation, lawmakers determined the existing state health fund would sunset June 30. If the new trust fund is not ready on time, employees and retirees would be without health coverage effective July 1 unless the Legislature moves to revive the health fund temporarily and allow those members enrolled in union- sponsored plans to stay where they are.
Under the current timeline, proposals from health insurers must be received by Oct. 1 and contracts awarded by Nov. 26. Request for proposals were sent out to insurers last week.
The 10-member board overseeing the new fund -- made up of five representatives each from management and unions -- is having a difficult time getting past mistrust on both sides, say those familiar with the situation.
In addition, the Legislature will not decide until next year how much money to allocate for the new system. Collective bargaining to determine employer contribution levels will likely not take place until a new administration takes office next year, leaving the board to create a health benefits plan without even knowing how much money they have to spend.
To complicate matters further, two of the trustees who represent union interests resigned from the board last week.
United Public Workers representative Clifford Uwaine gave no reason for his departure and could not be reached for comment. James Williams, who was nominated for the position by the University of Hawaii Professional Assembly, sent a letter to the board last week detailing some of his concerns.
Although Williams said he resigned in order to devote more time to his current position with Royal State Insurance subsidiary Voyager Charter School, his letter outlined some problems.
While Williams noted some progress was made after the hiring of an administrator for the plan and a health care consulting firm, he said an over-reliance on the state deputy attorney general for advice or to settle disagreements has made it difficult for all sides to be heard.
"What has occurred is that once the deputy attorney general provides advice, it is treated as if it were an inviolable decree from the almighty, with no further consideration given to alternative points of view," William's letter said.
Williams said he believes it would be better to let the courts clarify the application of the law when it comes to settling contentious or sensitive issues rather than always relying on the state's attorney general's office.
"It's not surprising that the employer Trustees would agree with the deputy attorney general's opinion, nor that the employee-beneficiary Trustees would disagree with the deputy attorney general," he said.
Key for the union's side is determining how much its members will pay for their health plans, Williams said in a telephone interview.
"Collective bargaining is the biggest single issue," Williams said. "The trust doesn't know what the employer contribution will be so therefore doesn't know what employees will contribute."
Under the current plans, the state pays about 60 percent of the cost. With the generally less costly union-sponsored plans, that contribution covers 70 percent to 90 percent of the cost for active enrollees, according the information contained in the bill passed by the Legislature last year.
Unionized state employees are free to enroll either in the state health plan or in one sponsored by their union.
But the Legislature changed the way the government contribution would be calculated, switching from paying a percentage of the total cost of the health plan to contributing a fixed dollar amount, which has not been set for active employees. As a result of continually increasing health care costs, employees and retirees may wind up paying more for future health coverage.
For active employees, that fixed dollar amount will likely be negotiated during collective bargaining sessions, which may not be settled until after health plan coverage has already been selected by trustees.
The new administrator of the Employer-Union Benefits Trust Fund, Mark Fukuhara, concedes there are a lot of unanswered questions, and the departure of the two trustees could slow progress, especially if any of the remaining trustees on the union side miss any board meetings. If another union-sponsored trustee is absent, the board would not have enough members to take any action.
"We can't take actions or decisions without a quorum but we could still move forward with committees," Fukuhara said.
Fukuhara said the governor's office has already sent letters asking for nominees to replace the two departing trustees.
Fukuhara noted that trustees would discuss problems with the way the law creating the trust is written at their next meeting. They will examine whether it could be altered to better suit both sides, he said.
House Speaker Calvin Say, a sponsor of the legislation, said implementation of the plan could be delayed in the next legislative session to address issues that have come up.
"We could extend the implementation, that wouldn't be a big deal," he said. "If it's going to be tied to collective bargaining, then fine. All we are trying to do is look for savings."
The current health fund was established in 1961 to provide health coverage to state and county workers. Beginning in 1984, eligible employees were given the option of obtaining health benefits through union-sponsored plans. Since then, the percentage of active employees in the union plans has grown dramatically.
In 1999, a state audit found that if the state continued with its health fund system, the cost of employer contributions would reach $1 billion in 2013. By creating the new trust, legislators estimated the state could save $65 million by 2004 and cumulative savings of as much as $904 million by 2013.
State of Hawaii
