SB63 SD1: Proposal to solve nursing shortage good but falls short

The following testimony was submitted by the Grassroot Institute of Hawaii for consideration by the Senate Committee on Commerce and Consumer Protection and the Senate Committee on Ways and Means on March 1, 2023.

March 1, 2023
9:30 a.m.
Conference Room 211

To: Senate Committee on Commerce and Consumer Protection
       Sen. Jarrett Keohokalole, Chair
       Sen. Carol Fukunaga, Vice Chair

     Senate Committee on Ways and Means
     Sen. Donovan M. Dela Cruz, Chair
     Sen. Gilbert S.C. Keith-Agaran, Vice Chair

From: Grassroot Institute of Hawaii
           Ted Kefalas, Director of Strategic Campaigns


Comments Only

Dear Chair and Committee Members:

The Grassroot Institute of Hawaii would like to offer its comments on SB63 SD1, which would allow the Board of Nursing to issue temporary permits to nurses licensed in other states so long as the applicants comply with certain requirements.

If this bill is enacted, the Legislature will be formalizing the ad hoc approach to license recognition that began with Gov. David Ige’s COVID emergency proclamations. While this is a positive step to address the shortage of nurses in our state, it stops short of more effective and permanent reform measures.

It is well established that Hawaii is suffering from a shortage of vital healthcare workers, especially nurses. A 2021 report from the Hawaii State Center for Nursing estimated that the state has 300 to 400 fewer nurses than needed to meet demand.[1] Since 2021, we have seen research indicating that nearly one-fourth of Hawaii’s nurses have been considering leaving the workforce, largely due to the stresses caused by the pandemic.[2]

The problem — which existed before the pandemic — has not eased since the emergency was lifted.  Across the state, and especially in rural areas, Hawaii is facing shortages of experienced healthcare professionals, from primary care providers to nurses, specialists and staff.

Fixing the shortage in healthcare workers requires a multipronged strategy that will address everything from Hawaii’s high cost of living to the state’s regulatory scheme for healthcare facilities. Perhaps most important is the need to reform licensing regulations for healthcare professionals.

One-fourth of all licensed workers in the U.S. work in healthcare.[3] Their licenses can be difficult to obtain, are expensive and carry geographic or “scope of practice” limitations.

As discussed in an upcoming policy brief on medical licensing by the Grassroot Institute of Hawaii, the state’s shortage of healthcare professionals makes its restrictions on healthcare workers who already hold licenses in other U.S. states seem redundant and self-defeating.

As the Federal Trade Commission noted in a report on occupational licensing portability:

There is little justification for the burdensome, costly, and redundant licensing processes that many states impose on qualified, licensed, out-of-state applicants. Such requirements likely inhibit multistate practice and delay or even prevent licensees from working in their occupations upon relocation to a new state. Indeed, for occupations that have not implemented any form of license portability, the harm to competition from suppressed mobility may far outweigh any plausible consumer protection benefit from the failure to provide for license portability.[4]

In other words, though medical licensing is intended to protect the public, there is a point at which the level of regulation reduces the number of people in practice without an appreciable public benefit.

One study of licensing among medical professionals found that “licensing is associated with restricted labor supply, an increased wage of the licensed occupation, rents, increased output prices, and no measurable effect on output quality.”[5]

This is where we can benefit from the lessons learned during the coronavirus situation. The governor’s emergency modification to state licensing laws demonstrated a need to embrace license portability, making it a simple matter for a nurse licensed in another state to practice in Hawaii.

The temporary permit system outlined in this bill is a partial answer to the need to attract more nurses to Hawaii. However, as discussed in the Grassroot Institute upcoming policy brief, temporary permits would be “a Band-Aid approach” to the nursing shortage.

The brief continues: “A full [licensure] recognition scheme that encourages healthcare workers to relocate to Hawaii would be a more effective approach to addressing the state’s shortages in licensed healthcare professionals.”

Because it would create a pathway to local licensure for out-of-state nurses, albeit a temporary one, this bill would be an improvement on our current system. However, the fact that the permits are temporary undermines their value as a way to bring more healthcare workers to our state.

The committee should consider a more sustainable and long-term approach to attracting nurses to our state in order to help end the nursing shortage and improve healthcare access for all.

Thank you for the opportunity to submit our comments.


Ted Kefalas
Director of Strategic Campaigns,
Grassroot Institute of Hawaii

[1] Carrie M. Oliveira, “2021 Hawai’i Nursing Workforce Supply: Statewide Report,” Hawai’i State Center for Nursing, 2021.

[2] Holly B. Fontenot, et al., “Impact of the COVID-19 Pandemic on the Hawai‘i Nursing Workforce: A Cross-sectional Survey,” Hawaii Journal of Health and Social Welfare, May 2022.

[3] Ryann Nunn, “Improving Health Care Through Occupational Licensing Reform,” RealClear Markets, Aug. 28, 2018

[4] Karen Goldman, “Options to Enhance Occupational License Portability,” U.S. Federal Trade Commission, September 2018, p. 25.

[5] Sean Nicholson and Carol Propper, “Chapter Fourteen — Medical Workforce,” in “Handbook of Health Economics, Vol. 2,” Elsevier, B.V., 2012, p. 885, cited also in the previously mentioned FTC study, footnote #9, p3.

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