SECTION 1. The legislature finds that the federal Patient Protection and Affordable Care Act of 2010 (Affordable Care Act) required states to establish health insurance exchanges to connect buyers and sellers of health and dental insurance and facilitate the purchase and sale of federally-qualified health insurance plans and qualified dental plans. The initial intent of the state health insurance exchanges was to reduce the number of uninsured individuals, provide a transparent marketplace, conduct consumer education, and assist individuals in gaining access to assistance programs, premium assistance tax credits, and cost-share reductions.

The legislature further finds that, largely due to the success of the Hawaii Prepaid Health Care Act, the State enjoys an overall healthier population, lower uninsured rates, and lower premium costs than mainland states. It is therefore imperative that Hawaii's health insurance exchange, known as the Hawaii health connector, work in tandem with the Hawaii Prepaid Health Care Act to preserve the Prepaid Health Care Act's existing benefits for Hawaii residents.

The legislature additionally finds that, as part of its initial phase of operation, the Hawaii health connector has benefited from new tax credits available under the Affordable Care Act, including the advanced premium tax credit and small business health insurance tax credit. The combined value of these benefits through 2024 is estimated at $505,000,000, which is expected to provide direct financial stimulus to the State, facilitate the expansion of health insurance, and reduce uncompensated health care costs associated with the delivery of medical services to the State's eligible population.

The legislature also finds that the Hawaii health connector can provide further services to the people of Hawaii through the expanded use of its business model and technologies. The Hawaii health connector has the capability to provide non-biased enrollment, implementation, and benefit administration services for employers and their employees, which will generate additional revenue. The connector also has the potential to provide an integrated solution for medicaid enrollment and state-provided social services, which will reduce state social services costs.

The legislature further finds that the Hawaii health connector stated in its January 2015 annual report that it is on the path to financial self-sustainability and could reach a surplus of $1,800,000 by June 30, 2022. The connector has enrolled over 15,500 people to date, up from fewer than five hundred a year ago, and estimates that it will generate $984,443 in revenue in the fiscal year ending June 30, 2015. By 2022, the connector expects to bring in $14,800,000 in revenue. However, the connector will need approximately $28,000,000 over the next eight years until it can generate enough revenue to become self-sufficient.

The legislature notes that in 1996, the State founded the Hawaii Employers' Mutual Insurance Company (HEMIC) in an effort to address many of the problems with the State's workers' compensation system. The enabling legislation that created HEMIC included a funding mechanism, in the form of debentures authorized to be issued by HEMIC, to support HEMIC's operations while the company moved on a path to self-sustainability. Today, HEMIC is highly successful, self-sustaining, and has been given an "A" rating by the global credit rating agency A.M. Best. Exploring a funding mechanism similar to the one the State authorized when establishing HEMIC will enable the Hawaii health connector to support its operations, reach self-sustainability, and, eventually, return all funds advanced to the connector back to the State.

The legislature additionally finds that the sale of debentures by the connector can only be secured through the use of a guarantee of those debentures by the State. The legislature finds and declares that the issuance of the guarantees of the debentures under this Act is in the public interest and for the public health, safety, and general welfare of the State.

The purpose of this Act is to:

(1) Align state law with certain provisions of the Affordable Care Act by requiring qualified health plans in the Connector to contract with federally-qualified health centers and utilize payment methodology as specified in the federal Social Security Act;

(2) Retain the current financial and service benefits of the Hawaii health connector;

(3) Enhance the availability of services through the connector; and

(4) Assist the Hawaii health connector by authorizing the State of Hawaii to guarantee debentures issued by the connector.

SECTION 2. Chapter 435H, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§435H- Qualified health plans; federally-qualified health centers; services. (a) As a condition of certification, the commissioner shall require each qualified health plan to meet the requirements of an essential community provider under title 45 Code of Federal Regulations section 156.235 and to:

(1) Offer any willing federally-qualified health center that provides services in geographic areas served by the qualified health plan the opportunity to contract with the plan to provide to the qualified health plan's enrollees all ambulatory services that are covered by the plan that the federally-qualified health center offers to provide; and

(2) Reimburse each federally-qualified health center for those services, as provided in section 1902(bb) of the Social Security Act, title 42 United States Code section 1396a.

(b) For purposes of this section, "federally-qualified health center" has the same meaning as in section 1905(l)(2)(B) of the Social Security Act, title 42 United States Code section 1396d."

SECTION 3. Section 435H-1, Hawaii Revised Statutes, is amended by adding a new definition to be appropriately inserted and to read as follows:

""Qualified health plan" means a qualified plan or a qualified dental plan."

SECTION 4. Section 328L-3, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

"(d) The legislature may make appropriations from the fund for the following purposes:

(1) To maintain levels of programs determined to be essential to public health, safety, welfare, and education;

(2) To provide for counter cyclical economic and employment programs in periods of economic downturn;

(3) To restore facilities destroyed or damaged or services disrupted by disaster in any county; [~~and~~]

(4) To guarantee, approve, and oversee the issuance of debentures by the Hawaii health connector pursuant to section 435H-3(f); and

[~~(4)~~] (5) To meet other emergencies when declared by the governor or determined to be urgent by the legislature.

Any act making appropriations from the emergency and budget reserve fund shall include a declaration of findings and purposes setting forth the purposes, the amounts, and the reasons why the appropriations are necessary and shall require a two-thirds majority vote of each house of the legislature."

SECTION 5. Section 435H-2, Hawaii Revised Statutes, is amended by amending subsections (b) and (c) to read as follows:

"(b) The purposes of the connector shall include:

(1) Facilitating the purchase and sale of qualified plans and qualified dental plans;

(2) Connecting consumers to the information necessary to make informed health care choices;

(3) Enabling consumers to purchase coverage and manage health and dental plans electronically; [~~and~~]

(4) Performing any and all other duties required of a health insurance exchange pursuant to the Federal Act[.]; and

(5) Providing enrollment, implementation, and benefit administration services for employers and their employees for non-qualified health plans.

(c) The connector shall serve as a clearinghouse for enrollment and information on all qualified plans and qualified dental plans listed or included in the connector."

SECTION 6. Section 435H-3, Hawaii Revised Statutes, is amended to read as follows:

"§435H-3 Funding. (a) The connector may receive contributions, grants, endowments, fees, or gifts in cash or otherwise from public and private sources including corporations, businesses, foundations, governments, individuals, and other sources subject to rules adopted by the board. The State may appropriate moneys to the connector. As required by section 1311(d)(5)(A) of the Federal Act, the connector shall be self-sustaining by January 1, 2015[~~, and~~]. To achieve continued self-sustainability, the connector may charge assessments or user fees to participating [~~health and dental~~] carriers, or may otherwise generate non-insurer based funding to support its operations. Moneys received by or under the supervision of the connector shall not be placed into the state treasury and the State shall not administer any moneys of the connector nor be responsible for the financial operations or solvency of the connector.

(b) In addition to any other means of generating revenue pursuant to subsections (a) [~~and~~], (c), and (d), the connector may sell or lease its information technology infrastructure and services to other separate non-connector programs; provided that the sale or lease is in compliance with federal regulations.

(c) In addition to any other means of generating revenue pursuant to subsections (a) [~~and~~], (b), and (d), the connector may also charge fees for displaying advertisements for ancillary services on the connector's website.

(d) In addition to any other means of generating revenue pursuant to subsections (a), (b), and (c), the connector may conduct enrollment, implementation, and benefit administration services for employers and their employees for non-qualified health plans or other ancillary products and services.

[~~(d)~~] (e) All plans to generate revenue for the connector shall be in compliance with federal [~~law.~~] and state laws, rules, and regulations.

(f) The connector may issue debentures in amounts collectively not to exceed $28,000,000, which debentures shall be guaranteed by the State, payable solely from operating revenue received by the connector. The debentures shall be issued in the name of the connector and not in the name of the State. The State of Hawaii shall approve the terms of the debentures before they are issued. The director of finance, pursuant to an act of the legislature, may use the emergency and budget reserve fund to guarantee, approve, and oversee the issuance of debentures by the connector. The final maturity date of the debentures shall not exceed ten years from the date of issuance. The board shall set aside and pledge revenues as necessary for the payment of the principal and interest on the debentures."

SECTION 7. There is established in the state treasury a trust fund to be known as the Hawaii health connector debenture guarantee trust fund, which shall serve as the reserve for all debentures guaranteed under this Act.

SECTION 8. There is appropriated out of the emergency and budget reserve fund of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2015-2016 to be deposited into the Hawaii health connector debenture guarantee trust fund, established by section 7 of this Act.

This sum, when and if necessary, shall be expended by the director of finance for the purposes of this Act.

SECTION 9. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 10. This Act shall take effect on July 1, 2050.

THE SENATE	S.B. NO.	1028
TWENTY-EIGHTH LEGISLATURE, 2015		S.D. 2
STATE OF HAWAII