“Universal” Health Care in Hawaii: A Quarter Century of Failure

Today, the world learned that Hawaii is dropping its plan for “universal” health care for kids, Keiki Care, just seven months after it launched. (For some insightful commentary, see here.)

But wait a minute… Hawaii already imposed “universal” health care in 1974! Or maybe not, I guess.

In my analysis of California’s Schwarzenegger-Nuñez Health Care Deforminator, ABX1 1, last year’s failed attempt to impose mandatory, private, “universal” health insurance in the Golden State, I reviewed the Hawaiian attempt to rope everyone into a government-approved plan. (See pp. 29-30 for sources).

In 1974, Hawaii mandated that employers provide coverage and pay half the premiums directly, via the Prepaid Health Care Act. Hawaiian businesses resisted through litigation, claiming that the federal Employee Retirement Income Security Act (ERISA) exempted them from such a state law. This defense has subsequently been used successfully by Maryland retailers and (as yet) unsuccessfully by San Francisco restaurants. However, because “Prepaid” pre-dated ERISA, the court decided to grandfather the Hawaii law.

Nevertheless, the 1974 Prepaid Act did not achieve “universality”, so the state has continued to fiddle. In 1989, the State Health Insurance Program of Hawaii “moved the state closer to universal coverage”, but as late as 1993, Hawaii’s efforts were described by a scholarly observer as “lodged somewhere in midstream”. On the other hand, managers in the state’s health bureaucracy convinced themselves that Hawaii had covered 95% of its uninsured population by 1993!

If only it were so easy: In 1974, one in 50 Hawaiians was uninsured. Last year, it was one in ten. Furthermore, the market for individual health insurance in Hawaii is so uncompetitive that observers cannot even estimate an average premium.

The media report that Keiki Care, which was instituted less than a year ago, was crowding kids out of private health care. If so, it’s good that it expire. However, it is only the most recent step in the Aloha state’s unfortunate record of trying to “cover the uninsured” through expanded government.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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