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The Honolulu Advertiser

Posted on: Friday, April 26, 2002

Insurance rate regulation, bottle bill near passage

By Kevin Dayton
Advertiser Capitol Bureau Chief

The state would impose a nickel deposit on all bottles and cans to encourage recycling, and for the first time would regulate health insurance rates, under bills tentatively approved by House and Senate negotiators yesterday.

Democrats hailed both bills as changes that will benefit consumers and the community at large.

Critics accused lawmakers of advancing bills that accomplish little, and may actually harm the healthcare and beverage industries in an attempt to appeal to voters in an election year.

Lawmakers still scrambled last night to reach agreement on dozens of bills and put them in their final form before a key deadline at midnight tonight. The Legislature is scheduled to adjourn Thursday.

Jennifer Diesman, government relations manager for the Hawaii Medical Service Association, said lawmakers want to regulate the rates of HMSA and other insurers for political reasons.

"I think HMSA and Kaiser are big organizations. There is a theme in the Legislature to review or bring under control large organizations, and we don't necessarily think being big is a bad thing," she said. "The reason our membership is as large as it is, is because we've done a really good job."

Gary Yoshioka, general manager of the Pepsi Bottling Group-Hawai'i, said the bottle bill will make beverages more expensive for consumers, may hurt sales and will have a "minimal" impact on litter.

"When consumers understand the impact to their pocketbook as well as the effort they have to make to participate in the bottle bill, they may finally realize truly what this means and the impact it's going to have on their daily lives," said Yoshioka, who is also the representative for a food and beverage industry organization called Hawai'i Citizens for Comprehensive Recycling.

House Majority Whip Brian Schatz said he is pleased with both bills, which he said will benefit the public and the environment.

"You're doing your job right when the special interests are screaming and angry at the end of the session," said Schatz, D-24th (Makiki, Tantalus). "I would hope we would have the courage to stand up for regular consumers, and I think that's what we've been doing over the last couple of days."

Both bills need final approval in floor votes next week before the full House and Senate, and strong lobbying efforts against both measures are expected to continue until those final votes are taken.

Both bills have been supported by Gov. Ben Cayetano's administration, meaning the governor is likely to sign then into law if the Legislature approves them.

House and Senate negotiators yesterday agreed to a new version of the bottle bill that would impose a nickel deposit on most bottles, cans and plastic beverage containers beginning in 2005. Those deposits would be refunded to consumers when the beverage containers are returned for recycling.

House Bill 1256 would also phase in an additional charge of up to 1 cents per beverage container that the state Health Department would use to subsidize the recycling industry. When fully phased in, that charge would raise about $12 million a year, and would not be returned to consumers.

Gary Gill, the Health Department's deputy director for environmental health administration, said consumers will find the bottle bill makes it easier to recycle all kinds of goods because it requires that new "redemption," or recycling, centers be set up across the state.

"You're going to see fewer cans and bottles littering our highways and our beaches, and you're going to see a healthy and happy recycling industry that's going to create jobs and economic development for the state of Hawai'i," Gill said.

Passing that bill was a top priority this year for Sierra Club Hawaii and other environmental groups.

Yoshioka said the bottle bill will affect only about 2 percent of the waste that flows into Hawai'i's landfills. "It's going to have a minimal impact on litter, but it's going to drive $26 million to the coffers of our government," he said.

That $26 million estimate is based on container fees that will be collected and nickel deposits the government will get to keep when consumers fail to return their beverage containers for recycling, he said.

The measure to regulate health insurers, House Bill 1761, would give the state insurance commissioner authority to review rate filings by HMSA and other insurers, and allow the commissioner to reject rates if they are deemed to be too high, too low or unfairly discriminatory.

Other lines of insurance such as no-fault and property insurance are regulated in similar ways, and Cayetano and other supporters contend regulation is necessary because HMSA and Kaiser Permanente dominate the local market. Regulation is justified because there is little competition locally, supporters say.

Richard Miller, University of Hawai'i law professor emeritus and spokesman for the Citizens Against Health Care Monopolies, said the measure is "a great consumer bill" that makes sense because the state requires Hawai'i employers to buy insurance for their workers.

"It will do what's absolutely fair," Miller said. "If you're going to require people to buy insurance, particularly small businesses, then there's a corresponding obligation to make sure the rates are fair and affordable."

But Diesman said if the state insurance commissioner forces HMSA to lower its rates, HMSA would have to cut its costs by paying doctors and hospitals less for their services, and reducing the benefits it will cover with its plans.

"We think that in the next several months or a year down the road, what you're going to have is a dismantling of the overall system, because everyone's struggling right now," she said. "Costs are rising, but you're not reducing the cost of care by creating new regulation."

There likely will be an attempt to kill the health insurance rate regulation bill next week in the House, where many of the 19 House Republicans have expressed opposition. House Speaker Calvin Say, D-18th (Palolo, St. Louis, Kaimuki), also has said he has doubts about the bill.

House Minority Leader Galen Fox said he believes that all 19 Republicans oppose the bill, which means it would take only seven Democratic votes against the measure to muster 26 no votes and kill it in the 51-member House.

"What happens when you fix prices is you reduce competition, you don't encourage it," said Fox, R-21st (Waikiki, Ala Wai). He said the state should take other steps to encourage competition, such as eliminating taxes on for-profit health insurers so those companies can compete with HMSA.