RELATING TO HEALTH CARE MARKET OVERSIGHT.

SB3175

THE SENATE

S.B. NO.

3175

THIRTY-THIRD LEGISLATURE, 2026

STATE OF HAWAII

A BILL FOR AN ACT

relating
to health care market oversight
.

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

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SECTION 1.
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The
legislature finds that consolidation in the health care industry, including
horizontal and vertical integration among hospitals, health insurers, physician
organizations, and other health care entities, has accelerated nationwide and
within the State.
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Evidence from multiple
jurisdictions demonstrates that this consolidation frequently results in
increased health care costs, higher insurance premiums, reduced competition,
diminished patient choice, workforce instability, and the restriction or
elimination of essential health care services, without corresponding
improvements in quality or access.

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The legislature further finds that
vertically integrated health care transactions present unique risks to the
public interest because they combine control over the financing, delivery, and
management of care within a single corporate structure, thereby enabling cost
shifting, preferential contracting, patient steering, service denial, and the
displacement of higher-cost or higher-need patients onto public and safety-net
health systems.
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These effects
disproportionately burden the State, counties, and taxpayers, and undermine the
stability of the State's public hospitals and health programs.

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The legislature recognizes that federal
antitrust enforcement alone is insufficient to address these risks,
particularly where transactions fall below federal reporting thresholds or
where competitive harms are localized, cumulative, or indirect.
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The legislature finds that states have
increasingly exercised their sovereign authority to establish health
care�specific transaction review frameworks that supplement, but do not preempt
or conflict with, federal antitrust law.
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This Act is informed by and incorporates best
practices from other state oversight models, including pre-transaction notice
requirements, comprehensive public-interest review standards, and enforceable
approval authority.

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The legislature further finds that the health
care market structure directly affects affordability, access, and public
expenditures, and therefore constitutes a matter of core state policy
appropriately subject to legislative oversight.
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While administrative agencies are best
positioned to conduct technical and economic analyses of proposed transactions,
the ultimate determination of whether certain large-scale, vertically
integrated health care mergers are consistent with the public interest is a
policy judgment that warrants legislative review where specified thresholds of
market concentration and cost impact are met.

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Accordingly, the purpose of this Act is to:

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(1)
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Establish
a state oversight framework for material health care entity mergers,
acquisitions, and other consolidation transactions;

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(2)
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Require
advance notice and public interest review by the state health planning and development
agency; and

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(3)
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Require
legislative approval, by concurrent resolution, of certain vertically
integrated health care transactions that meet specified market share and
pricing impact thresholds.

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SECTION 2.
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Chapter 323D, Hawaii Revised Statutes, is amended by adding a new part
to be appropriately designated and to read as follows:

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Part .
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HEALTH CARE MARKET OVERSIGHT

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323D-
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Definitions.
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As used in this part:

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"Health care entity" means any
hospital, hospital system, health insurer, health maintenance organization,
physician organization, provider group, ambulatory surgical center, or other
entity licensed or authorized to provide or finance health care services in the
State.

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"Material health care
transaction" means a merger, acquisition, affiliation, joint venture,
consolidation, asset transfer, or other arrangement that results in a change of
control, governance, or material influence over a health care entity.

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"Vertical consolidation" means a
material health care transaction between entities operating at different levels
of the health care supply chain, including but not limited to insurers and
providers, hospitals and physician organizations, or entities that finance,
manage, or deliver health care services.

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323D-
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Health care transactions; notice required.
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(a)
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A
health care entity shall not enter into a material health care transaction
unless the entity provides written notice to the state agency no later than one
hundred eighty days before the proposed effective date of the transaction.

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(b)
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The notice shall include, at a minimum:

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(1)
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A
detailed description of the transaction structure and governance changes;

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(2)
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Identification
of all parties to the transaction and affiliated entities;

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(3)
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Current
and projected market shares by service line and geographic area;

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(4)
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Historical
and projected pricing, reimbursement rates, and premium impacts;

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(5)
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Impacts
on access to care, the workforce, and service availability;

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(6)
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Any
planned changes to service lines, facilities, or patient eligibility criteria;
and

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(7)
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Any
additional information required by the state agency.

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323D-
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State agency review.
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(a)
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The
state agency shall conduct a comprehensive review of each material health care
transaction to determine whether the transaction is in the public interest.

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(b)
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In conducting its review, the state agency
shall consider whether the transaction:

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(1)
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Is
likely to increase health care costs, premiums, or out-of-pocket expenses;

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(2)
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Will
reduce access to care or essential services;

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(3)
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Will
substantially lessen competition or increase market concentration;

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(4)
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Will
negatively affect health care workers or labor conditions;

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(5)
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Will
shift costs or patient burden to the State or county health systems; or

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(6)
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Otherwise
poses a risk to the health, safety, or welfare of the public.

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(c)
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The state agency may approve, approve with
conditions, or disapprove the transaction.

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323D-
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Legislative approval.
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(a)
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Notwithstanding any law to the contrary, no
material health care transaction involving vertical consolidation shall take
effect until approved by the legislature under subsection (c) whenever the
transaction:

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(1)
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Would
result in a combined entity controlling twenty-five per cent or more of any
relevant health care service market or insurance market within the State or any
county; and

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(2)
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Would
result in, or is reasonably projected to result in:

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(A)
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Price
increases exceeding medical inflation benchmarks;

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(B)
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Premium
growth exceeding state cost growth targets; or

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(C)
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Increased
expenditures by the State, counties, or public health programs.

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(b)
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Upon completion of its review, the state
agency shall transmit a report to the legislature containing:

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(1)
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Findings
and conclusions regarding the transaction;

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(2)
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Any
recommended conditions or restrictions to impose on the transaction; and

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(3)
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A
recommendation for approval or disapproval.

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(c)
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A transaction subject to this section shall
not be implemented unless approved by a concurrent resolution adopted by the
legislature.

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(d)
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Failure
of the legislature to approve the transaction shall constitute a denial.

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323D-
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Penalty.
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(a)
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A health
care entity that consummates a material health care transaction without
approval as required under this part shall be subject to:

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(1)
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Civil
penalties not to exceed $1,000,000 for each separate offense;

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(2)
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Injunctive
relief, including unwinding of the transaction; and

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(3)
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Any
other relief deemed appropriate by a court of competent jurisdiction.

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(b)
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Each date of violation shall constitute a
separate offense.

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323D-
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Rules.
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The state agency may adopt rules pursuant to chapter 91 necessary for
the purposes of this part."

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

INTRODUCED BY:

_____________________________

Report Title:

SHPDA; Health
Care Entity Transactions; Market Oversight; Mergers and Acquisitions; Vertical
Integration; Legislative Approval

Description:

Establishes
a state oversight framework for material health care mergers, acquisitions, and
other consolidation transactions. Requires advance notice and public interest
review by the State Health Planning and Development Agency.
�
Requires legislative approval, by concurrent
resolution, of certain vertically integrated health care transactions that meet
specified market share and pricing impact thresholds.

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