Academic journal article Review of Social Economy

Enactment of Mandated Health Insurance in Hawaii

Academic journal article Review of Social Economy

Enactment of Mandated Health Insurance in Hawaii

Article excerpt


As the Requiem is heard for federal policy solutions to the lack of health insurance of 37 million Americans, postmortem examinations of the legislative process already abound. (See Clymer et al. 1994; Geisel and Lenckus 1994.) In the fall of 1992, as Mr. Clinton was pressed for details of the plan, he delivered the speech committing to universal coverage achieved by mandating employers to provide employee insurance, though many had been discussed.(1) This speech, coupled with Newsweek's report (September 19, 1994) that the real saboteurs of the legislation had been Herman Cain, president of the National Restaurant Association and John Motley, chief lobbyist for the National Federation of Independent Business, pinpoints employer mandates as a critical option in financing health insurance for all citizens. This option acknowledges the diminishing rate of employer-provided coverage and the fact that two thirds of the uninsured are families where one person or more works at least 17.5 hours per week (Davis 1987), and is indeed workable.

Hawaii has had a law, the Prepaid Health Care Act, mandating employers to provide health insurance since 1975. Further, the first federal effort by the Center for Disease Control (CDC) to track preventable deaths demonstrates that Hawaii had the lowest rate of preventable deaths from chronic diseases, and "most closely resembles the theoretical ideal utopian state." (Hahn, et al. 1990).

This paper provides policy makers and scholars with the elements of the act, hypothesized variables that made it feasible, and the Act's legislative development - including the exemption from the Employee Retirement and Income Security Act (ERISA). Our analysis centers on key variables:

1 Hawaii's historically unique health care culture which permitted more efficient production of health care;

2 the uniqueness of Hawaii, which eliminates neighbor-state policy impact; and

3 the conservative to liberal trajectory.

Data were gathered in primary interviews and from historical and other documents.


The Prepaid Health Care Act required employers of employees who work at least 20 hours per week for at least four consecutive weeks, and who earned at least 86.67 times the hourly minimum wage per month, to provide health benefits for them. Not covered were dependents, government employees (all federal, state, and county employees are entitled to health benefits under a law enacted in 1961), employees covered by a federal medical program, seasonal agricultural workers, individuals paid solely on commission, and those employed by a spouse, son, or daughter, or an individual minor employed by a parent. Nor did the Act apply to those persons covered by a collective bargaining agreement. Self-insured employers continued to self-insure, but all plans had to be approved by the Prepaid Health Care Advisory Council.

Any plan offered to the employee had to provide benefits equivalent to those that "have the largest number of subscribers in the state," i.e., in 1990, Hawaii Medical Services Association Plan 4 or Kaiser Plan B. Based on these two plans, the following basic benefits had to be included: 120 days of hospitalization per calendar year, outpatient care, surgical, medical, and maternity benefits, and diagnostic services. The 1990 monthly premium cost for the two most common plans was: HMSA Plan 4, $103.90 and Kaiser Plan B, $90.36. The employer had to cover at least half of the cost of the premium while the employee's contribution had to be smaller than 1.5% of his monthly wage. If it was larger, the employer had to contribute the remaining portion.

The Act was administered and enforced by the Director of Labor and Industrial Relations, assisted by the Prepaid Health Care Advisory Council. Responsibility for daily administration rested with the Disability Compensation Division of the Department of Labor and Industrial Relations. …

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