Two good government advocacy groups are taking state Sen. Rosalyn Baker to task over her conduct of a confirmation hearing Friday.

The groups, Kokua Council and the League of Women Voters of Hawaii, sent separate complaints Monday to Senate President Shan Tsutsui critical of Baker, chair of Senate Commerce and Consumer Affairs.

Baker’s committee hearing was on 11 gubernatorial nominees to the board of the Hawaii Health Connector, a nonprofit established by the state to help uninsured individuals and small businesses buy health coverage beginning in 2014. The council, the league, AARP Hawaii and others oppose three of the nominees because they represent insurance companies.

Janet Mason, the league’s vice president, said Baker failed to conduct the hearing “in an open and acceptable way,” did not call on every person who submitted written testimony for each nominee and behaved rudely.

“There was not adequate opportunity for public input in this hearing,” said Mason. “The entire hearing took less than 2 hours, so the League believes more testimony could have been taken without jeopardizing efficiency and economy.”

Larry Geller, president of Kokua Council, echoed Mason’s concerns but went further. His testimony includes this statement:

The implications of this conduct go beyond the particular hearing and call into question the democratic process as practiced at the Hawaii State Legislature. For whatever reason, the Governor chose to appoint, looking specifically at the case of HMSA, the organization’s chief lobbyist to the Board rather than someone else with particular skills relevant to the provision of health care. HMSA and other insurers and lobbyists make significant and regular contributions to the campaigns of Senator Baker and other members of the Hawaii legislature, as do other corporations, organizations and wealthy individuals.

Geller told Civil Beat Monday that Baker “barred oral testimony and was hostile to consumer advocates who wanted to testify and not to others.”

Baker said she things differently.

“I certainly was not intending to offend anyone,” she said. “I try to treat everybody with respect. As I recall there was some levity and some humor in the hearing. It shouldn’t be acrimonious. I asked the testifiers who were in opposition to testify with aloha. I didn’t think that that was necessarily uncalled for.”

Baker said, “As I recall most all of the oral testimony, the ones commenting on written submittals, was in opposition. It was not as if the opposition was not heard. I didn’t even do any questioning — I left that to my committee members.”

As for the role of insurers on the Health Connector board, Baker does not believe there is a conflict of interest.

“I am not certain how three people (out of a 15-member board) can assert such influence that they can manipulate the process,” she said. “That is what being alleged.”

Insurers Selling Insurance

Geller is asking President Tsutsui to have the Senate reconsider the nominees and to bar Baker from serving on a conference committee that may be convened to consider Senate Bill 2434.

SB 2434 was amended by House Consumer Protection and Commerce March 23 to have insurers serve the Health Connector board only in an advisory, non-voting capacity.

The three nominees in contention are Jennifer Diesman, vice president for government relations for Hawaii Medical Service Association, the state’s largest health insurance provider; Joan Danieley, vice president of Health Plan Service and Administration at Kaiser Permanente Hawaii, the second-largest provider; and Faye Kurren, president and CEO of Hawaii Dental Service.

A fourth nomination, for Harris Nakamoto, was withdrawn because the nominee had recently left another insurer, Ohana Health Plan, to work for Kaiser.

The three nominations now await a full Senate vote.

Although Hawaii is among the states with the largest proportion of its population covered by health insurance — thanks to the state’s 1974 Prepaid Health Care Act — about 10 percent of residents are not covered.

States have set up health exchanges as a result of the Patient Protection and Affordable Care Act, aka Obamacare. But other states have made their health exchanges government agencies subject to sunshine laws.

“Allowing a representative and employee of an insurer on the board that determines the policies and rules under which insurers will be competing for customer business is an inherent conflict of interest,” said AARP Hawaii in its testimony. “The consumer is not served, and it is contrary to good public policy to allow board membership to individuals representing organizations who stand to gain financially by board policy and decisions.”

AARP continued: “Furthermore, allowing only selected insurers onto the board is unfair to insurers not on the board, as insurers on the board would have a clear inside advantage over those that don’t.”

In fact, the Federal Register states that the governing board that “represents consumer interests by ensuring that overall governing board membership is not made up of a majority (emphasis added) of voting representatives with a conflict of interest, including representatives of health insurance issuers.”

Baker also pointed out that the regulation of health insurance rates falls under the state insurance commissioner and not the Health Connector.

“The board is not going to make the policy — they implement the policy,” she said, explaining that the policy comes from Act 205 passed last session. “That is a very, very important distinction that I think is lost on some of the opposition.”

The senator also said that federal requirements call for the exchange to operate transparently and to allow for public input and financial disclosure.

“It’s not like the connector is out there without oversight — there are a series of benchmarks and key dates that have to be met,” she said. “The important thing the connector board has to do is get an Internet portal set up, because that is what this is — federal law requires this — it is an Internt marketplace available 24-7 to connect people without insurance.”

HMSA’s Clout

Gov. Neil Abercrombie‘s nomination of Diesman has particularly upset consumer advocates and good government types. Written testimony on the nomination is roughly split between those in favor and those against.

“There are assumptions being made that the potential income from the new insurers entering into the purchase through the Hawaii Health Connector may be $300,000,000,” wrote a group called Rights of Consumer Consortium from Mountain View on the Big Island. “The financial implications of this additional book of business will increase the income of HMSA by $176,665,767.”

But Tim Johns, HMSA’s senior vice president, wrote in his testimony, “As a member of the Interim Board of the Hawaii Health Connector, Jennifer already has been able to share her vast background and knowledge in actively assisting other Interim Board members and the Insurance Commissioner with the tremendous amount of effort that already has gone into developing Hawaii’s health insurance exchange. I know she is committed to seeing the Connector successfully implemented, and in a timely manner.”

HMSA is a generous contributor to political campaigns, and four members of Senate Commerce and Consumer Protection received contributions in 2011.

Baker received $2,600 from the HMSA Employee PAC and $250 from Tim Johns; Vice Chair Brian Taniguchi received $300 from the HMSA Employee PAC; Sen. Josh Green received $1,000 from Johns, $1,000 from HMSA administrator Hilton Raethel and $2,000 from HMSA PAC; and Sen. Clarence Nishihara received $250 from the HMSA Employee PAC.

Last year Abercrombie also received $1,000 from HMSA Senior Vice President Alfred Fortin, $1,000 from Executive Vice President and Chief Operating Officer Michael Gold and $4,000 from the HMSA Employee PAC.

In his complaint, Geller of Kokua Council said, “Our system of democracy demands that legislators represent not those who contribute most, but the voters and especially the constituents of those serving in office. At the Friday hearing, ordinary citizens were denied their right to petition their representatives on the Committee by providing information to committee members on how they wished the Committee to vote.”

Geller added, “At the same time, as my audio recording of the session demonstrates, the lobbyist-nominees were warmly treated, well spoken of, and their testimony unimpeded.”

Speaking to Civil Beat, Geller said, “Couldn’t the governor not find someone else? Was there no one else at HMSA with knowledge of health care other than their chief lobbyist? This reflects badly on the Senate.”

Baker disagrees.

“If you want to know how to build a house, you go to people who have done it before,” she said. “We look at the nominees the governor sends down, and I thought it was a very balanced list. You want expertise across they way, and I think my committee members were convinced before us were individuals of intergrity who understand their fiduciary responsibility to the connector.”

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