Hawaii’s Prepaid Health Care Act and its far-reaching costs

New policy brief explains Hawaii’s health coverage monopoly

The Grassroot Institute of Hawaii has released a new study,” “Hawaii’s Prepaid Health Care Act and Far-Reaching Costs,” by policy analyst Pearl Hahn. The brief exposes the ramifications of Hawaii’s unique healthcare mandate which requires employers to provide insurance for employees working 20 or more hours per week.

“The new report offers insight into a system that has proven costly to the taxpayer and ultimately is ineffective,” said Grassroot Institute President Jamie Story. “Experience has proven time and again that the private sector can perform more efficiently and effectively than government programs. “From a lack of doctors and hospitals to unaffordable insurance, Hawaii’s healthcare system is a mess.”

The comprehensive study found that:

• Since passing in 1974, the Prepaid Health Care Act has failed to sustain a low uninsured rate. Now at nearly 10% of the population, the state’s uninsured rate is on par with several states that do not have an employer mandate.

• PHCA has encouraged employers to hire workers for less than 20 hours a week to avoid providing insurance, contributing to the rising uninsured rate. In fact, Hawaii ranks first in the nation in percentage of employees working fewer than 20 hours a week without employer-sponsored insurance.

• The state’s requires that all health care plans provide benefits equal to or better than those offered by the plan with the largest number of subscribers in the state, thus protecting Hawaii Medical Service Association and Kaiser’s monopoly on nearly 90% of the market.

“Hawaii’s Prepaid Health Care Act continues to have a devastating effect on employment and the rate of covered residents in the state,” said Hahn. “With the Hawaii Medical Service Association and Kaiser controlling over 90% of the insurance market, there is no incentive to lower service costs and provide plans to best fit consumers,” she explained. 

The mission of the Grassroot Institute of Hawaii is to promote individual liberty, free market economic principles and limited, more accountable government.