Hawaii Health Care-Appendix A

COMPETITIVE PRACTICES
IN HAWAII'S HEALTH
CARE INDUSTRY

Appendix A


                                                           200
HOUSE OF REPRESENTATIVES             H.R. NO.              H.D. 3
SEVENTEENTH LEGISLATURE, 1994                              
STATE OF HAWAII                                            
                                                                   


                        HOUSE RESOLUTION

REQUESTING THE LEGISLATIVE REFERENCE BUREAU TO STUDY AND REPORT
    ON COMPETITIVE PRACTICES OF HEALTH INSURERS, MUTUAL BENEFIT
    SOCIETIES, AND HEALTH MAINTENANCE ORGANIZATIONS.



    WHEREAS, through a coordinated set of public-private
partnership programs Hawaii has achieved near universal access to
health insurance coverage for its people, with costs among the
lowest in the nation; and

    WHEREAS, despite this achievement, health care costs in
Hawaii continue to rise faster than the cost of most other goods
and services; and

    WHEREAS, most of Hawaii's residents are enrolled in health
plans or Health Maintenance Organizations (HMO) operated by non-
profit organizations; and

    WHEREAS, most of Hawaii's physicians and dentists are
participating providers or employees of these organizations; and

    WHEREAS, some health care providers are contemplating or
actually entering the health insurance business, intending to be
both providers and insurers of health care; and

    WHEREAS, concerns have been raised about the impact of this
market situation on free competition; and

    WHEREAS, concerns have also been raised as to the potential
for conflict of interest if an organization both provides and
pays for services; and

    WHEREAS, concerns have also been raised over the exclusionary
rating and enrollment practices of commercial, for-profit health
insurers; and

    WHEREAS, concerns have been also raised regarding the
potential negative impact of overly restrictive state regulation
on health care quality, costs, and access; and
                       
    WHEREAS, the State has a vital interest in ensuring that its
residents have adequate access to affordable and quality health
care services; now, therefore,

    BE IT RESOLVED by the House of Representatives of the
Seventeenth Legislature of the State of Hawaii, Regular Session
of 1994, that the Legislative Reference Bureau is requested to
conduct a study of the competitive practices of health insurers,
mutual benefit societies, health maintenance organizations, and
any other organization providing health care coverage in Hawaii;
and

    BE IT FURTHER RESOLVED that the study include but not be
limited to:

    (1)  A review and description of the administrative
         structures and operations of each of these organizations
         including persons covered, benefits and services
         offered, rates, rate setting practices, financial
         condition, administrative costs, and profits;

    (2)  An assessment of the impact that the size of these
         organizations have on competition and the cost of health
         care, and differences in their tax classifications;

    (3)  A determination of the current level of oversight of
         these organizations by the Department of Commerce and
         Consumer Affairs and other appropriate state agencies,
         as well as compliance with federal anti-trust laws and
         regulations;

    (4)  An assessment of the competitive practices of these
         organizations and the impact of these practices on the
         price and quality of health care in Hawaii, including
         those which may limit access to health care coverage or
         increase health care costs;

    (5)  An assessment of the impact on competition, quality, and
         cost of health care that the dual role that many of
         these organizations carry out may have in both the
         provision of health care services and payment for
         services delivered; and
     

    (6)  Recommendations for guidelines (if any) for the
         oversight of the practices of these organizations in
         order to protect the public interest and assure access
         to affordable, quality health care in Hawaii;

and

    BE IT FURTHER RESOLVED that the Office of Consumer
Protection, the Department of Commerce and Consumer Affairs, the
Insurance Commissioner, the State Health Planning and Development
Agency (SHPDA), the Department of Labor and Industrial Relations,
the Department of Health, and other relevant public agencies, and
all private health insurers, HMO's, and other packaged benefit
providers in the private sector, are requested to cooperate with
the Legislative Reference Bureau in conducting this study; and

    BE IT FURTHER RESOLVED that Phase I of this study involving
subjects 1, 2, and 3 be completed and submitted to the
Legislature no later than twenty days prior to the convening of
the Regular Session of 1995; and

    BE IT FURTHER RESOLVED that Phase II of the study involving
subjects 4, 5, and 6 be completed and submitted to the
Legislature no later than twenty days prior to the convening of
the Regular Session of 1996; and

    BE IT FURTHER RESOLVED the Legislative Reference Bureau
conduct this study by using to the extent feasible national
standards of measurement, state experiences, or other data sets;
and

    BE IT FURTHER RESOLVED that certified copies of this
Resolution be transmitted to the Director of the Legislative
Reference Bureau, the Hawaii Medical Service Association, the
Kaiser Foundation Health Plan, the Director of the Office of
Consumer Protection, the Director of Commerce and Consumer
Affairs, the Insurance Commissioner, the Director of Labor and
Industrial Relations, the Director of Health, the Hawaii
Association of Health Underwriters, and the Administrator of
SHPDA.


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