SB 2554: 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

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:

 

     SECTION 1.  (a)  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.

     (b)  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.  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.

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

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

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

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

          (A)  The director of health;

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

          (C)  The director of human services;

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

          (E)  The director of taxation;

          (F)  The insurance commissioner;

          (G)  The chief state economist;

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

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

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

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

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

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

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

     (1)  The state director of AARP Hawaii;

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

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

     (e)  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.

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

     (g)  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.

     (h)  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.  The project director shall:

     (1)  Serve at the pleasure of the commission;

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

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

     (i)  The commission, through the legislative reference bureau, shall procure consulting services for actuarial assessment, policy analysis and development, and public education and stakeholder engagement.  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:

     (1)  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;

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

     (3)  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.

     (j)  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:

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

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

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

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

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

     (k)  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:

     (1)  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;

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

     (3)  Comprehensive lifetime benefits or otherwise limited benefits;

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

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

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

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

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

     (9)  Alternative claim benefit eligibility requirements and criteria;

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

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

    (12)  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;

    (13)  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;

    (14)  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;

    (15)  Income and intergenerational cross-funding;

    (16)  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;

    (17)  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;

    (18)  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;

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

    (20)  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;

    (21)  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

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

     (l)  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.  The study shall, at a minimum, examine:

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

     (2)  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;

     (3)  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;

     (4)  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;

     (5)  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;

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

     (7)  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;

     (8)  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;

     (9)  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;

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

    (11)  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;

    (12)  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;

    (13)  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;

    (14)  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;

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

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

     (m)  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:

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

     (2)  Develop comprehensive public education and communication tools;

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

     (4)  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

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

     (n)  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.

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

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

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

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

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

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

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

     SECTION 2.  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:

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

     (2)  $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.

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

     SECTION 3.  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.  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.  Requires the Commission to submit reports to the Legislature.  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.