November 21, 2002
Chamber members discuss prospective legislative agenda
Ben DiPietro

Pushing for more tax incentives and a corresponding reduction in government spending to pay for them, and working for a more equitable solution to the problems of rising health care and workers' compensation insurance costs are the top priorities of members of the The Chamber of Commerce of Hawaii.

Chamber members met Thursday to discuss how best to achieve their main goals heading into a 2003 legislative session in which Republican Gov.-elect Linda Lingle will have to contend with majority Democrats controlling both the House and Senate.

Taxes, medical costs and workers' compensation were the three top issues identified through a chamber survey of 1,100 of the state's top businesses, chamber President Jim Tollefson said.
"These are seen as the make-or-break issues that weigh heavily on the backs of businesses in Hawaii," Tollefson said. "We are here today to ensure that these issues get on the table and stay on the table during the legislative session."

Regarding tax cuts and incentives, it's important to look past specific bills to what the overall effect of the sum total of legislative action is on the business community, says AIG Hawaii Insurance Co. CEO Robin Campaniano.

Chamber members have a responsibility to educate lawmakers and their staffs on the importance of a healthy business environment so that they are less inclined to introduce or support bills that are bad for business, he says.

Having to defend itself from such harmful bills takes up too much time and energy of the business people and business lobbyists at the state Capitol prevents the business community from working cohesively to advance positive legislation, Campaniano says.

"The vast majority of our elected officials and staff are wonderful people and trying to do the right thing, but a lot of them have had little or no experience in the private sector. What we've got to do is tell them how the system works, explain to them economic theory, the theories we face from day to day," Campaniano said. "This, perhaps, is one of the most important functions that we can provide."

Business can work with the new governor and legislators to identify areas of government that are too cumbersome, and taxes or fees that can be eliminated or replaced by other existing assessments to help reduce paperwork, such as having public utilities and transportation companies pay the 4 percent general excise tax instead of the 4 percent public services tax.

The chamber may also want to consider asking Lingle to push for a reduction in the G.E.T. to 3 percent, instead of her advocating for elimination of the G.E.T. on medical services, with Campaniano saying it would spread the benefit further throughout the community and not just to one or two segments.

"This would help more consumers and it certainly would help all businesses," Campaniano said. "With a reduction of the G.E.T. just for medical and food services, we're helping only certain sectors of business."

Business also must be willing to identify areas that could be cut to help make up for the $300 million that would be lost through such a G.E.T. reduction, he says.

"When we're talking tax relief, we're talking less state tax revenue," Campaniano said. "They're [state] is going to have to offset that somehow."

Another area for chamber involvement is privatization, or managed competition, of government services. The chamber needs to work with government to identify areas where private companies can provide services better and at lower cost, and then work to make those potential opportunities known to chamber members, Campaniano says.

The same can also be done with the military, which accounts for $9 billion of ecomomic activity in Hawaii and which also is looking to privatize many of its services, from housing to aircraft maintenance, he says.

Much like the task force created last year to deal with the issue of mandated benefits lawmakers have enacted laws creating 15 such mandated benefits since 1987, including benefits for newborn babies and reimbursements for certain dental procedures, among others _ chamber members this year need to push for a task force to look at the Pre-Paid Health Act of 1974, says Gregg Yamanaka, president, TeraBiz and chairman of the chamber's Small Business Council.

To do that requires looking at these old problems in new ways, and that must involve greater collaboration between the various stakeholders, including business, government, insurers, employees and health plans, he says. Efforts must focus on quality of health care, structure of health plans and the cost of providing quality care without laying blame on any one group for the
present problems, Yamanaka says.

"Health care costs need to be solved by an alliance of partners. This is shared responsibility," Yamanaka said. "We're trying to look at all perspectives, look at all proposals, put them all on the table and see which ones make sense."

The mandated benefits task force recommended several changes, including creation of a new review process, and that will be one of the key areas of attention at the Legislature, he says.

With regard to Pre-Paid Health Act, Yamanaka says businesses also must become more aware of the law's provisions and be willing to change how they approach health care, pointing out that a majority of the business people attending the meeting at the Hale Koa Hotel said they still paid 100 percent of their employees' health insurance costs, even though the law allows for employees to pay up to 1.5 percent of those costs.

To help provide buying power and lower costs for employers, the chamber is in discussions with the Hawaiian Business Health Council to provide a health care plan for its members, Yamanaka says. The council represents the major employers in Honolulu and, when combined with the chamber's membership, creates a work force of almost 200,000 people, and that collective power can be leveraged to get reduced rates and other benefits, Yamanaka says. Tollefson says talks are ongoing and declined further comment on the idea.

There is a looming train wreck coming in the area of workers' compensation unless changes are enacted, says Christine Camp, managing director, Avalon Development, and vice-chairwoman of the chamber's board of directors.

Concerns for businesses include increasing medical costs, increased longevity, including people receiving lifetime disability benefits, use of alternate care, inflation, a weak economy and the inability of insurers to increase company premiums to match payouts, Camp says.

"It's not just an increase in claims or injuries on the job. We're going to need a general overview or all these factors will result in increased costs, regardless of what we do," Camp said.

Chamber members need to lobby for more equitable laws that set limits on how long and how much treatment injured workers can receive, push for more money for state agencies so they can acquire sufficient staff and equipment to quickly process claims, says Camp, pointing out Wisconsin settles claims for workers on temporary total disability in an average time of 2 1/2 weeks, while 15 percent of Hawaii's claims remain unsettled for between one and two years, and 9 percent longer than two
years.

It's vital, she says, that business begin a dialogue on these matters now, since it may take years for changes to be enacted. "Drunk driving, it's a no-brainer ... but it took seven years to pass," Camp said. "Workers' comp may take just as long, but we feel this is the right time to start."

The chamber's legislative agenda won't be finalized until just before the start of the legislative session in January, Tollefson says.

Pacific Business News (Honolulu) - November 21, 2002
http://pacific.bizjournals.com/pacific/stories/2002/11/18/daily66.html

© 2002 American City Business Journals Inc.