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 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 used 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 purpose of this Act is to:

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

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

(3) Support the self-sustainability of the connector by 2023 by enabling the connector to issue debentures issued in the name of the connector.

SECTION 2. Section 435H, 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 3. 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 4. Section 435H-2.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§435H-2.5[]] Hawaii health connector. The official designation of the Hawaii health connector shall be the State of Hawaii health insurance exchange. [~~The qualifying standards and conditions relating to the receipt of funds contained in chapter 42F shall apply to the funds received by the State of Hawaii health insurance exchange.~~]"

SECTION 5. 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~~] The connector shall be self-sustaining by January 1, [~~2015,~~] 2023, and 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.

(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 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 6. Section 435H-12, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) If a health insurance plan utilizes and compensates an insurance agent or broker, the Hawaii health connector shall not be responsible for any compensation to that agent or broker that sells a qualified health plan or non-qualified health plan through the connector. The issuer of the qualified health plan shall bear all compensation to an agent or broker that sells a qualified health plan through the connector."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

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