Health Insurance in Hawaii Not Paradisiacal
January 23, 2002
Health care in Hawaii is a mess, says Greg Scandlen. Hawaii has a waiver from ERISA, the federal law governing most employer-sponsored health plans, that allows the state to mandate employer-provided health insurance coverage.
The state's "Prepaid Health Care Act" requires that workers pay no more than 1.5 percent of their wages for their share of the cost of coverage.
- As premiums have increased much faster than wages, the employee contribution now amounts to only 7 percent of the cost -- compared to 30 percent of the cost when the law was passed in 1974.
- Curiously, the state itself pays only 60 percent of the cost for state employees, with state workers paying the other 40 percent.
- Since people who work only 20 hours a week are exempt from the law, many companies employ only part-time workers, and unemployment is high.
The act also requires a single benefit design, which has helped create a near monopoly among health insurance providers. The Hawaii Medical Service Association (the local Blue Shield plan) has the bulk of the market with a local Kaiser plan taking almost all the balance.
Now the state insurance commissioner is demanding new power to control premium rates. The chairman of the state legislature's Health and Human Services Committee has proposed a "universal reimbursement fee schedule" that would require all payers -- including auto, workers' comp and health plans -- to pay health care providers at 120 percent of the Medicaid rates. And another legislator wants to create a "universal long-term care insurance plan" that would require all adults over age 25 to pay for nursing home coverage.
Source: Greg Scandlen, "Hawaii - Legislators To Make Bad Problems Worse," Scandlen's Health Policy Comments, January 21, 2002; based on a series by Kristen Sawada in Pacific Business News.
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