As the debate over health care reform rages on in Congress and across the country, our illustrious and beautiful 50th state is asking to opt out of whatever ultimately gets passed. Attorneys who specialize in health-care and employment issues say they believe a Hawaii exemption is needed to maintain the level of coverage that residents have grown accustomed to.

“We don’t need the feds to go in and mess up our system,” said Michael Nauyokas, a Honolulu arbitrator and labor lawyer. “I doubt that the proposed federal law is going to be as good as the Prepaid Health Care Act, which is working, or as comprehensive. So why fix something that’s not broken?”


Originally enacted in 1974, the Hawaii PHC Act was the first in the nation to set minimum standards of health care benefits for workers. Employers must provide health care coverage to employees who work at least 20 hours per week and earn 86.67 times the current Hawaii minimum wage a month ($628). Coverage commences after 4 consecutive weeks of employment or the earliest time thereafter at which coverage can be provided by the health care plan contractor, which is usually the first of the month.

Employers can choose one of the following three ways to provide the mandated coverage to their employees.

• Purchase an approved plan from Hawaiian insurance companies, mutual benefit societies and health maintenance organizations who sell health care plans to Hawaii employers directly. These plans must be reviewed by the PHC Advisory Council and approved by the Director of the Department of Labor and Industrial Regulations (DDLI).

• Purchase an insured plan of employers’ choice. Some employers with corporate officers located outside of Hawaii purchase a health care plan and offer such plan to their employees on a nationwide basis. Approval by DDLI required.

• Provide a health care plan that is funded by the employer. As a self-insurer, the employer must show proof of financial solvency and ability to pay benefits by furnishing DLIR with the latest audited financial statements for review.

Don’t Tread On My Hawaiian Health Care

Because of its comprehensive nature, Hawaii lawmakers and many health-care advocates don’t want the state law disturbed or diluted by the plan that may emerge from the current debate over reform. Unlike Hawaii law, the proposals currently before Congress do not have any mandates for employer coverage and instead make individuals responsible for buying their own health insurance, though the majority would still get it through their employers.

John D’Amato, a partner with D’Amato and Maloney, a law firm which specializes in employee benefits, also supports the exemption. “It has been such a good thing and businesses treat it just as a cost of doing business that’s factored into our local economy,” he said. “I think the federal government could do us all a great service by giving all of the states the freedom to do what Hawaii has done … we’ve been able to innovate and come up with a plan that works for us. If it becomes a federal issue, we’re back to the beginning.”

It’s Not All Sunshine, Cool Breezes and Coconuts in the 50’th State

Not everyone agrees. Opponents will point to the fact the bill has created a monopoly with just 2 companies, Hawaiian Medical Service Association and Kaiser Permanente controlling almost 90% of the market. They also point to coverage for costly mandated treatments such as in vitro fertilization and treatment for drug abuse.

Hawaii PPO and HMO Prevalent Plan Summary

Do you believe that the coverage mandated by Hawaii is too rich. Click on the plan designs and let us know what you think. Maybe all Americans deserve the types of coverage that over 90% of Hawaiian citizens enjoy today. You think it’s just the weather and scenery that makes living in our 50’th state so attractive?

Sources: State of Hawaii Departmant of Labor and Industrial Relations, Pacific Business News