RELATING TO LONG-TERM CARE FINANCING.

SB2554

THE SENATE

S.B. NO.

2554

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to long-term care financing
.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

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SECTION
1.
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(a)
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There is established the joint house of representatives and senate long-term
care financing advisory commission to examine the feasibility of different
public and private financing options to pay for long-term care services and
supports and determine which long-term care financing mechanisms have
objective, evidence-based merit.

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(b)
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The commission shall be an independent body
and the commission's actions, deliberations, inquiries, investigations,
findings, conclusions, and recommendations shall not be subject to any
direction, oversight, veto, interference, limitation, or restriction by any
other state branch, department, or agency, except as provided by chapter 92,
Hawaii Revised Statutes, or any other applicable federal or state law.
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Any expenditure of funds by the commission,
including but not limited to any personnel matters or contracting for
professional services, shall be subject to the requirements of chapters 37 and
103D, Hawaii Revised Statutes.

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(c)
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The commission shall consist of the following
mandatory voting members:

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(1)
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One member of the house of representatives, to
be appointed by the speaker of the house of representatives;

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(2)
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One member of the senate, to be appointed by
the senate president;

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(3)
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The following ex officio members, or their
designees:

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(A)
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The
director of health;

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(B)
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The
director of the executive office on aging;

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(C)
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The
director of human services;

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(D)
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The
administrator of the med-QUEST division of the department of human services;

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(E)
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The
director of taxation;

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(F)
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The
insurance commissioner;

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(G)
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The
chief state economist;

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(H)
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The
executive director of the university of Hawaii economic research organization;
and

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(I)
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The
director of the university of Hawaii at Manoa center on aging; and

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(4)
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The following members, to be jointly appointed
by the speaker of the house of representatives and the senate president:

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(A)
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Two members of the public with demonstrated
knowledge and experience with long-term care services and supports delivery or
health care economics;

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(B)
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One
long-term care consumer advocate with demonstrated experience representing the
interests of individuals receiving or needing long-term care services and
supports; and

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(C)
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One
direct care worker with demonstrated experience representing the interests of
the direct care workforce.

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(d)
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The commission shall invite the following
individuals to be voting members:

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(1)
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The state director of AARP Hawaii;

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(2)
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The president and chief executive officer of
the Healthcare Association of Hawaii; and

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(3)
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One representative of a med-QUEST managed care
organization.

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(e)
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Members of the commission subject to
subsection (c) shall be designated and appointed no later than thirty days after
the effective date of this Act.

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(f)
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The commission shall hold its first meeting
no later than sixty days after the finalization of its membership.
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The members of the commission shall elect
from amongst themselves a chairperson and vice-chairperson by a simple
majority.

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(g)
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Members of the commission shall serve without
compensation; provided that members who are appointed pursuant to subsections
(c)(4) and (d) may request reasonable reimbursement for necessary expenses,
including travel expenses, subject to reasonable justification and
documentation of the expense and availability of funds.

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(h)
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Within thirty calendar days of the
finalization of its membership, the commission, through the legislative
reference bureau, shall enter into a contract for the services of a part-time
project director to provide support for the commission, including but not
limited to the solicitation and execution of consulting and other professional
service contracts; overseeing and assuring the progress of contracted
consultants; regularly advising the commission of consulting work progress;
scheduling of briefings, meetings, and public hearings; responding to questions
from commission members; initiating inquiries; coordinating and performing
legislative and policy drafting; and preparing and drafting consulting service
requests for proposals and consulting engagement contracts.
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The project director shall:

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(1)
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Serve at the pleasure of the commission;

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(2)
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Have actual demonstrated working knowledge and
experience with public health insurance program financing and policy
development and analysis; and

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(3)
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Work no more than twenty hours per calendar
week.

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(i)
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The commission, through the legislative
reference bureau, shall procure consulting services for actuarial assessment,
policy analysis and development, and public education and stakeholder
engagement.
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The consultants contracted
pursuant to this subsection shall conduct objective, evidence-based assessments
and studies of the feasibility, costs, reliability, long-range solvency,
benefits and impacts, and population served and affected by:

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(1)
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Alternative public and private long-term care services
and supports financing mechanisms for services provided to persons with
functional limitations and chronic illnesses needing assistance to perform
routine activities of daily living and instrumental activities of daily living;

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(2)
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Efforts to mitigate the risk and severity of
needing long-term care services and supports and controlling the cost of these
services; and

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(3)
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Implementing home- and community-based reform
measures for health care and other supportive services provided to eligible
persons in their home or other community settings, rather than in an institutional
setting.

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(j)
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In determining the required terms,
conditions, and deliverables of the actuarial assessment, policy analysis and
development, and public education and stakeholder engagement contracts, the
commission shall consider any applicable reports, studies, and draft
legislation, including but not limited to:

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(1)
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S.B. No. 1088, S.D. 2, H.D. 2, C.D. 1 (Regular
Session of 2003);

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(2)
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"Financing Long Term Care: A Report to
the Hawaii State Legislature", executive office on aging, office of the
governor (July 1991);

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(3)
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"Feasibility of a Long-Term Services and Supports
Insurance Program for Hawaii", executive office on aging, department of
health (December 15, 2014);

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(4)
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"Long-Term Services and Supports
Feasibility Study Commissioned by the Massachusetts Executive Office of Health
and Human Services", Milliman Report (April 8, 2025); and

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(5)
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"Final Report of Findings", kupuna
advisory council, long-term care financing permitted interaction group (September
2025).

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(k)
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The actuarial assessment consultant
contracted by the commission pursuant to subsection (i) shall coordinate with
the policy analysis and development and public education and stakeholder
engagement consultants to, at a minimum, objectively assess and study:

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(1)
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The sufficiency of projected assets and income
of alternative long-term care services and supports financing mechanisms to
cover projected liabilities and expenses over a seventy-five-year period based
on defined economic and demographic assumptions;

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(2)
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Different alternative forms of beneficiary
participation, such as mandatory, voluntary, or optional participation;

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(3)
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Comprehensive lifetime benefits or otherwise
limited benefits;

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(4)
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Alternative revenue bases for deriving funding,
such as payroll, or income, or some other base, and the effect on long-range
financial solvency;

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(5)
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The financial equity and other effects of
different caps on the revenue base;

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(6)
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The near-term and long-range financial and
solvency implications of implementing a pay-as-you-go, fully funded, or any
other funding mechanism;

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(7)
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The financial equity and other effects of
fixed, flat, progressively graduated, or some other type of beneficiary payment
rate or contribution funding mechanism;

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(8)
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Alternative vesting requirements that would
apply for paid benefit eligibility;

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(9)
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Alternative claim benefit eligibility
requirements and criteria;

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(10)
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The financial feasibility, cost, and effects
of providing any form of spousal or dependent benefit coverage;

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(11)
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The feasibility, cost, and effects of
providing supplemental or additional coverage options;

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(12)
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The cost, feasibility, financial equity, and
other effects of different alternative transportable or portable benefit
entitlements for either or both claimants already receiving covered care and
vested non-claimants who relocate to locations outside the State;

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(13)
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The actuarial cost and long-range solvency
impact, financial and intergenerational equity, and other effects of any
provision for the return in some form of beneficiary payments made in support
of the financing mechanism in the event that a beneficiary dies without having
made any claim of benefit or claimed benefits are less than paid in payments;

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(14)
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The projected number of beneficiaries who are
expected to pay into the financing mechanism and the projected number of
beneficiaries who will claim benefits and the cost of those benefits, claim
frequency, continuance curves, utilization, and claim costs year-by-year for a seventy-five-year
period;

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(15)
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Income and intergenerational cross-funding;

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(16)
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Specified year-by-year assumptions of the
number of beneficiaries paying and paid in amounts, investment income,
administrative and operating expenses, cash flow, annual fund balances, and
claim benefit costs for a seventy-five-year period;

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(17)
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Specified year-by-year assumptions for the
distribution of attained population age, age and gender, domestic and
international migration, births, active life mortality, disabled life
mortality, and age and gender related morbidity and mortality for a seventy-five-year
period, and other essential assumptions;

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(18)
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Specified year-by-year inflation adjusted
assumptions about labor force total lives and wage by age and gender trends,
and state-adjusted taxable and earned income for a seventy-five-year period;

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(19)
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Specified year-by-year the assumed cost
inflation rates and the projected inflated costs of all covered long-term care services
and supports benefits;

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(20)
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The trended magnitude of any related cost
savings for other long-term care services and supports payers and programs,
such as individual private payers, medicaid, medicare, and others;

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(21)
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The financial and actuarial effects for
various robust cost containment and cost-sharing alternatives, such as
copayments, deductibles, out-of-pocket maximums, capitation, global budgets,
single-payer service price negotiations, and other cost containment and
cost-sharing mechanisms; and

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(22)
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Results of sensitivity testing different
combinations of critical assumptions.

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(l)
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The policy analysis and development consultant
contracted by the commission pursuant to subsection (i) shall coordinate with
the actuarial assessment and public education and stakeholder engagement
consultants to examine the role, function, and economic impact of home- and
community-based support systems and formulate proposed policies to more
effectively support long-term care in community settings in a manner that is
equitable, resilient, sufficiently resourced, not fundamentally reliant on
unpaid caregiving, and strategically targeted for clinically appropriate
beneficial application.
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The study shall,
at a minimum, examine:

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(1)
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The essential role, function, and need for
expanded home- and community-based support resources related to wellness,
prevention, and continuity of care coordination;

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(2)
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The direct and indirect cost of different
home- and community-based support services and delivery mechanisms, including
but not limited to the value of any associated unpaid caregiving by family,
relatives, or others;

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(3)
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A cost-benefit analysis and return on
investment examination of the extent to which the current home- and
community-based support system in the State functionally and objectively meets
the need for home- and community-based support services;

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(4)
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The clinical appropriateness of current level
of care need measures and placement determinations for different levels and
forms of home- and community-based support services and how current level of
care policies, standards, and practices contribute to clinically inappropriate
placement of patients in home- and community-based support care;

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(5)
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The transfer of care burden and expense to
unpaid caregivers and the full measure of direct and indirect costs borne by
unpaid caregivers and the effect of unpaid caregiving on poor quality of care
due to lack of training, oversight, and inadequate care resources;

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(6)
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Alternative mechanisms to fairly, adequately,
and directly compensate persons who render unpaid caregiving;

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(7)
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The cost and scarce resource utilization
economies of scale inefficiencies, low productivity, high unit costs, and high
marginal operating expenses of decentralized home- and community-based support service
delivery models;

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(8)
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Current care and service resource shortages
and the effects on cost, access, quality, accountability, denials,
inappropriate placements, unnecessary hospitalizations, institutional
placements, emergency room visits, and other factors;

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(9)
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Fragmentation, siloing, discontinuity of care,
uncoordinated care planning and placement, and the critical need for
substantially improved home- and community-based support system navigation and
coordinated care planning;

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(10)
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Access inequities and unmet needs, including
but not limited to waitlisting and service caps and shortages; geographic
disparities; and socioeconomic barriers;

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(11)
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Effects of federal medicaid funding rules and
restrictions that contribute to service instability and limitations, including
but not limited to the cost neutrality formulas for waivers;

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(12)
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Quality, oversight, and outcome deficiencies,
including but not limited to the lack of consistent, standardized, and robust
quality and patient outcome focused measures and metrics; the complex web of
multiple and often conflicting compliance standards and mandates; inadequate
enforcement and regulation; non-existent transparent public accountability
reporting; and the need for more effective and stronger surveillance, oversight
and affirmative enforcement of requirements to protect against abuse, neglect,
and injury in private home- and community-based settings;

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(13)
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The woodwork effect on costs resulting from
the expansion of home- and community-based support benefits or relaxing of
qualifications for receiving home- and community-based support benefits;

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(14)
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Significant effective reforms to address the
critical direct care workforce shortage, including but not limited to measures
that directly address low wages and benefits, lack of training and career
advancement pathways, poor job quality, and equity disparities for the
predominantly female, people of color, and immigrant workforce;

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(15)
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Restoring the original intent and fiscal
autonomy of the kupuna caregivers program (Act 102, Session Laws of Hawaii
2017); and

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(16)
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Vulnerabilities associated with significant
federal funding of the State's home- and community-based support system.

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(m)
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The public education and stakeholder
engagement consultant contracted by the commission pursuant to subsection (i)
shall coordinate with the actuarial assessment and policy analysis and
development consultants to, at a minimum:

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(1)
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Develop stakeholder and policy landscape
position mappings and analysis;

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(2)
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Develop comprehensive public education and communication
tools;

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(3)
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Develop accurate, objective, responsive, and
non-partisan community and influencer briefing materials;

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(4)
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Develop and implement a robust and active
community engagement and stakeholder outreach strategy plan involving multiple
statewide neutral town hall information meetings and listening sessions to
gather broad public input as part of the objective assessment and study
process; and

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(5)
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Develop and implement timely, responsive, and
objective information dissemination and inquiry response protocols for media
and public inquiries.

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(n)
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The commission shall seek funding for its
work from public and private sources, such as the federal Centers for Medicare
and Medicaid Services or the Center for Medicare and Medicaid Innovation; Office
of the Assistant Secretary for Planning and Evaluation, United States
Department of Health and Human Services; The Commonwealth Fund; Kaiser Family
Foundation; Milken Institute Center for the Future of Aging; Urban Institute;
Brookings Institution; and others.

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(o)
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The legislative reference bureau shall
provide administrative support to the commission, including assisting with the
drafting of the commission's reports to the legislature.

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(p)
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The commission shall submit the following
reports to the legislature:

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(1)
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A preliminary report no later than December
31, 2026;

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(2)
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An interim report of any substantial progress
no later than December 31, 2027; and

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(3)
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A final report of its findings and
recommendations, including any proposed legislation, no later than December 31,
2028
.

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(q)
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The commission shall cease to exist on June
30, 2029, unless extended by the legislature.

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(r)
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For the purposes of this Act, "commission"
means the long-term care financing advisory committee.

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SECTION
2.
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There is appropriated out of the
general revenues of the State of Hawaii the sum of $100,000 or so much thereof
as may be necessary for fiscal year 2026-2027 for the commission, through the
legislative reference bureau, to contract for staffing and other administrative
costs to carry out the purposes of this Act, to be allocated as follows:

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(1)
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$60,000 for one part-time project director;
and

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(2)
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$40,000 for the staffing and administrative
costs associated with drafting proposals for an actuarial assessment consultant
contract, policy analysis and development consultant contract, and public
education and stakeholder engagement consultant contract.

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The sum
appropriated shall be expended by the legislative reference bureau for the
purposes of this Act.

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SECTION 3.
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This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

Report Title:

Long-Term
Care Financing Advisory Commission; Joint Legislative Committee; Legislative
Reference Bureau; Long-Term Care Services and Supports; Home- and
Community-Based Care; Consultants; Appropriation

Description:

Establishes
a joint legislative Long-Term Care Financing Advisory Commission to examine the
feasibility of different financing options for long-term care services and
supports.
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Permits the Commission,
through the Legislative Reference Bureau, to contract for services of a
part-time project director and prepare proposals for contracts for consultants
to support the work of the Commission.
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Requires the Commission to submit reports to the Legislature.
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Appropriates funds.

The summary description
of legislation appearing on this page is for informational purposes only and is
not legislation or evidence of legislative intent.