Health care in Hawaiì: an agenda for research and reform.

I. INTRODUCTION In 1999, the United States Census Bureau reported that 16.3% of Americans did not have health insurance in 1998, up from 16.1% in 1997 and 13% in 1990.1 The increased lack of health insurance is particularly troubling because the unemployment rate is down and the economy is vibrant. The Census Bureau also reported that Hawaii led the Nation in providing health insurance, with only 8.8% of the population uninsured.2 This fact alone makes Hawai'i a model for the U.S. Hawai'i's success goes beyond providing health insurance coverage. "Coverage is not care."3 The state is also a model in terms of providing care through community health centers.4 Broad insurance coverage, and access to care through community-- based primary care centers, help to make the people of Hawai'i healthy.5 Further, Hawai'i's health care costs are lower than costs in the rest of the nation.6 Part II of this Article explores the reasons why Hawai'i leads the nation in all these respects. Part III discusses the application of Hawai'i's approach in other states. Two key factors limit the application of Hawai'i's approach to other states: (1) Hawai'i enjoys a unique exemption from the Employee Retirement Income Security Act that sharply limits the ability of the states to try new approaches, and (2) in Hawai'i, important voices of organized labor have supported state mandates, while in other states they have not. Part IV focuses on providing health insurance coverage and care for children, an area in which Hawai'i lags behind national averages and does even worse than many less affluent states. II. HAWAI'I'S LEADING ROLE A. HAWAI'I'S PROGRAM TO PROMOTE HEALTH INSURANCE COVERAGE Hawai'i's Prepaid Health Care Act of 1974 (Prepaid Health Care Act, or PHCA) requires employers to provide health insurance comparable to that negotiated by unionized employees to all full-time workers.7 Employers may require their employees to contribute up to 50% of the costs of premiums or 1.5% of their salaries to health insurance, whichever is lower.8 Employers may request state funds to cover premium costs that exceed 1.5% of the total wages payable to any employee.9 Many factors made Hawai'i the only state to require employers to provide health insurance coverage for people who work more than twenty hours a week. First, the descendants of the Caucasian missionaries who have dominated economic life in Hawaii since the nineteenth century created a system of plantation-based health care, Sick and injured people are not productive workers.10 Second, since World War II, Democrats have almost completely controlled politics in Hawai'i.11 Third, demographic factors, including relatively high levels of union membership and a large Asian-American population that sought insurance coverage more than other ethnic groups, produced comparatively high levels of insurance coverage, wholly apart from the state legal mandate.12 But history and demographics do not translate into political action without an agent for change. The influential International Longshore and Warehouse Union strongly supported mandatory insurance coverage.13 Other unions have generally opposed state laws that mandate health insurance coverage or benefits.14 This is a large, historic debate in American labor and is discussed more fully below. In 1989, Hawai'i moved to address the problem of insurance coverage for people who were not attached to the labor force and were not eligible for Medicaid. The State Health Insurance Program (SHIP) provided health insurance coverage for uninsured people with income below 300% of the poverty line, with costs shared by enrollees and the state. SHIP charged premiums based on a sliding scale, offering free coverage to people with incomes below the poverty line and charging substantial premiums to middle income people with incomes up to 300% of poverty. The SHIP benefit package emphasized primary care and encouraged people who needed long-- term care to qualify for Medicaid. …