The Senate Committee on Judiciary & Labor


The Senate Committee on Government Operations

Tuesday, March 22, 2016

1: 17 p.m.,  Room 414  

RE: HB 2015, HD1, Relating to the Hawaii Employer-Union Health Benefits Trust Fund

Attention: Chairs Gilbert Keith-Agaran and Donna Mercado Kim, Vice Chairs Maile Shimabukuro and Les Ihara, Jr. and Members of the Committees

The University of Hawaii Professional Assembly (UHPA) urges the committee to support HB 2015, HD1, that makes fundamental changes to the structure of the Hawaii Employer-Union Health Benefits Trust Fund (EUTF).  We can all agree that the EUTF is not functioning as it was originally intended, which concerns both employees and employers.

Benefits are an integral component of employee compensation, and this measure would assist in making improvements to the EUTF by allowing:

  1. Exemptions to Chapter 103-D Hawaii Revised Statutes Procurement Code providing flexibility in selecting benefit plan carriers, consultants and actuaries
  2. Changes to the composition of the EUTF Board to better represent the beneficiaries
  3. The Board to retain legal counsel other than the AG’s office
  4. Individual unions and employers to develop a sub-trust and sub-board of trustees to administer that bargaining unit’s contribution benefits if they negotiate a specific contribution to apply only to that unit
  5. Health plans provided based on collectively bargained contributions from both the employer and employees

Testimony provided in opposition to this measure in prior committee hearings argue that this bill would diminish the benefits derived from economies of scale arising from larger group packages and group rates.  This assertion is inaccurate.  The larger the group, the larger the risk pool, which translates to more credible rates for that risk pool.  However, a more credible risk pool does not necessarily equate to more favorable rates.  Rates are calculated by the utilization of a risk pool, the benefit offerings, and health care trend (expected future health care costs).  A smaller population with more control over its benefits can better control costs and have lower rates.  

UHPA urges the committee to support HB 2015, HD1.

Respectfully submitted,

Kristeen Hanselman                                                                                                                                    Executive Director