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Legislature overrides Governor’s veto of Maui hospital bill

The State House and Senate today voted to override Gov. David Ige’s veto of SB 2077 to preserve the management transfer of three state run Maui hospitals to Kaiser Permanente.

The bill, now a state law, authorizes severance benefits or early retirement incentives for employees who would be directly affected by the impending privatization of state hospital operations on Maui and Lanai.

Last year state lawmakers authorized the privatization of Maui Memorial Medical Center, Kula Hospital & Clinic and Lanai Community Hospital, and the state reached an agreement in January, 2016 to have Kaiser Permanente operate all three.

Lawmakers were concerned that if they did not override the veto, the transfer would be in jeopardy along with the health and safety of Maui residents and visitors.

The hospital transfer would be the largest privatization of public facilities in state history, and Gov. Ige has predicted it will save the state $260 million in hospital subsidies over the next decade.

The Governor released the following statement:

Our primary concern is and always has been the health and well-being of Maui’s residents and visitors as we work to privatize Maui region hospitals.

We are committed to a successful transfer and transition to a new Maui health care system for all stakeholders, which includes our employees.

However, this transaction must be done correctly for the common good. The concerns expressed in my veto message have not changed. Three areas of concern remain:

  • The bill jeopardizes the Employees Retirement System’s tax exempt status.
  • The bill does not appropriate funds for lump-sum cash payments for affected employees.
  • The bill adds an additional unfunded liability of about $17.2 million to the ERS and $18.4 million to the Employer Union Benefits Trust Fund (EUTF). This puts the state’s long-term financial position, along with its bond ratings in jeopardy. Bond ratings determine what the state pays in interest on borrowed funds.

The next steps for my administration include:

  • Conferring with the attorney general to assess and evaluate the impact of the veto override.
  • Continuing to work in good faith with the UPW to bring resolution to the federal court injunction and to finalize the details. We are close to an agreement.
  • Continuing to work on a smooth transition in order to provide a new system of health care for Maui.

This is an historic, complex multi-stakeholder transformation and we are optimistic that we will resolve all unforeseen issues.

In the interim, I am confident that the existing Maui hospital staff and operations team will continue to provide quality health care services to the people of Maui.

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