The health care debate in Washington is making people sick with worry, but Hawaii is likely to fare better than much of the country if the Trump administration and Republicans in Congress repeal the Affordable Care Act.

That’s because the state devised its own health insurance system decades ago, way before the rest of the country, and it is still working quite well.

State officials fear Hawaii could see a painful reduction in federal Medicaid funding under any Republican health care legislation. But no matter what happens in Washington, they say the vast majority of people in Hawaii will continue to be covered whether parts of the ACA, President Barack Obama’s signature health care overhaul, survive or not.

“We’ve prioritized coverage as a state for a very long time so we are in a very different place” than many other states, said Judy Mohr Peterson, Hawaii’s Medicaid director, and president of the National Association of Medicaid Directors.

Demonstrators participate in national “die-in for healthcare” at the Hawaii state Capitol.


In Hawaii, as elsewhere around the nation, Republican efforts to roll back federal support for health coverage, have prompted demonstrations known as “die-ins,” where protesters pose as corpses.

Dozens of participants gathered recently at Hawaii’s State Capitol holding above their prone bodies hand-made paper tombstones bearing hypothetical causes of death—RIP, Pre-existing Condition, Choked on Republican Hypocrisy, and Health Coverage Denied.

President Donald Trump has promised to repeal the Affordable Care Act, which he calls a “terrible law” that is failing. He met for lunch at the White House on Tuesday with 15 Republican Senators — 12 men and three women — to discuss a strategy to replace it. At this point, no details have been released on what might be included in a Senate plan.

Their efforts to find a new approach come in the wake of sharp criticism of legislation passed by the GOP-controlled House.

Their bill would cut the federal deficit by $119 billion over 10 years but cause 23 million people to lose their health insurance, according to the Congressional Budget Office. After initially celebrating its passage, Trump reportedly told Senate leaders this week that the House bill was “mean.” 

Often lost in the volatile debate, however, is Hawaii’s health care situation.

In 2013, before the ACA went into effect, about 13.4 percent of Americans were uninsured, but only 6.7 percent of people in Hawaii lacked insurance.

“Hawaii is unique because the state put in an effective state employer-based near-universal health care system in the 1970s,” said Jack Lewin, chairman of the Washington, D.C.-based National Coalition on Health Care, who served as Hawaii’s director of health from 1986 to 1994.

In 1974, more than 40 years ago, the state enacted a plan called Prepaid Health Care, which requires all employers to provide health-care insurance to any worker employed more than 20 hours a week, at a cost of not more than 1.5 percent of a worker’s salary. It was planned and implemented during the administrations of governors John Burns and George Ariyoshi, and further augmented by governors John D. Waihee III and Ben Cayetano.

Strongly opposed by some people at the time — and bitterly fought all the way to the U.S. Supreme Court — the Prepaid Health Care Act has proven effective in important ways.

Governor David Ige presser. 3 may 2017

Governor David Ige says Hawaii’s health care system is a national leader.

Cory Lum/Civil Beat

“I always remind people we’ve had universal health care for 45 years,” said Gov. David Ige in April, soon after he returned from the National Governors Association conference, where health care was heatedly debated by more than 40 governors.

Today, about 95 percent of Hawaii residents have insurance, one of the highest rates in the country, trailing only Massachusetts and the District of Columbia. Hawaii residents are among the healthiest in the country, the state has one of the nation’s least expensive health insurance markets and the per-capita Medicare cost is the second-lowest in the country.

A Two-Tiered Health Care System

Health insurance developed almost accidentally in the United States. During World War II, employers trying to attract workers during the defense buildup began offering company-paid health insurance voluntarily to entice workers whose pay was held down by wage controls.

Insurance plans spread to protect the young and healthy, and doctors, drug-manufacturers and hospitals benefited from a new source of reliable payment for medical care. As demand grew, health care and insurance became an increasingly profitable businesses.

Across the country, however, employers were not required to provide health insurance, creating a two-tiered system for people — those who were provided with insurance and those who were not.

In 1965, Medicare, a system of health insurance for the aged, and Medicaid, a plan to cover the poor, was put in place.

But during the next four decades, additional efforts to expand health care coverage, or create a federal health care system, were often stymied in Washington. The American Medical Association initially fought it and conservatives were ideologically opposed. The existing system was also lucrative for drug companies and providers, while many patients were able to obtain a wider array of more expensive treatments.

As health care costs started rising, employers became more reluctant to improve benefits or increase coverage. Insurers and providers sought to find ways to limit use of patients’ health care by raising deductibles, restricting services and banning out-of-network procedures.

Hawaii Went Its Own Way

But Hawaii’s health care system developed in a very different way. The state has a long tradition of the government providing health care and medical oversight, so there was less opposition to the idea of a state insurance plan and state-imposed restrictions.

In 1850, King Kamehameha III created the Royal Board of Health, establishing a public health department before one had been created in any state. Some of the Hawaii’s largest hospitals were founded and financed by Hawaiian queens before the fall of the monarchy, offering free health care for the poor.

Missionary doctors from New England provided medical care gratis as part of their gospel outreach. Owners of sugar and pineapple plantations, some of whom were descendants of the missionaries, opened clinics and hospitals to provide free or low-cost health care to employees and their families.

Some believe that there has long been a sense that the community is responsible for providing care for its citizens.

“Hawaii is the bluest state in the nation,” said former Gov. Ben Cayetano, in an interview with Civil Beat. “The philosophy of the Democratic party is that everyone is treated equally.”

Governor Ben Cayetano interview at his residence. 21 april 2017

Gov. Ben Cayetano recalled there was much business opposition to the Prepaid Health Care Act.

Cory Lum/Civil Beat

The effort to enact the Prepaid Health Care Act by the Legislature was propelled by the International Longshore and Warehouse Union.

ILWU President Harry Bridges had long championed a government health-care plan, and Yoshito Takamine, a former plantation worker who became an ILWU union official and then a state legislator, emerged as the driving force behind the legislation, according to U.S. Rep. Colleen Hanabusa. Some also recall the leadership of ILWU social worker Ah Quon McElrath, the daughter of Chinese immigrants.

It was not easy, Cayetano recalled. “There was opposition from the business community,” he said.

The original legislation passed by a vote of 19-to-4 in the state Senate, and 35-to-16 in the House, and was scheduled to go into effect on Jan. 1, 1975. Most employers cooperated and tens of thousands of Hawaii residents obtained coverage or found their benefits package improved.

Standard Oil of California, however, opposed a provision of the law, saying it violated the federal Employee Retirement Income Security Act which appeared to preempt Hawaii’s law. Standard Oil eventually won a lawsuit in federal court to block Hawaii’s Prepaid Health Care plan.

Hawaii’s two powerhouse senators went to work to find a legislative fix. In 1983, Sens. Daniel Inouye and Spark Matsunaga pushed through an amendment to the federal law, giving Hawaii a waiver from it. It is the only state in the country to get this kind of exemption. Hawaii began enforcing the Prepaid Health Care plan again in 1983.

A further refinement of Hawaii’s health insurance system came in the form of a state health insurance plan known as SHIP that was introduced during the tenure of Gov. Waihee. It provided insurance at a low price for people who had been left uninsured, including those who were self-employed, worked fewer than 20 hours a week or who were students.

“During the years it existed, Hawaii reached coverage of 96 percent of the population, something no other state had achieved—and today seems appropriately ‘miraculous,’” Lewin said.

SHIP was subsequently folded into Medicaid in Hawaii, which caused the coverage level to slip.

But then changes came when Obama’s health care plan was enacted in 2010. It created a state marketplace for health insurance and expanded access to Medicaid for those still uncovered in Hawaii.

On the mainland, many of the then-43 million uninsured got coverage under the new laws. But within a year or two, premiums for some began rising. According to a report last month by the U.S. Department of Health and Human Services, premiums have doubled in the past four years.

The number of insurance companies willing to participate in the program has fallen, a fact frequently cited by Trump. In 2014, there were an average of five insurers in each state exchange, but a number of companies have dropped out of the market, and by 2017, there was only one insurer remaining in a third of all counties, according to the Kaiser Family Foundation.

In Hawaii, the state exchange, called the Hawaii Connector, proved an embarrassing and costly failure. At the same event where Ige touted the success of Hawaii’s health-care system overall, he called the Health Connector a debacle.

“It was disgusting,” he told the group. “I assure you we are not going back to the Health Connector — ever. It’s been disconnected and dismantled.”

But ACA also provided more money for Medicaid, which has allowed the state to offer coverage to more low-income people, according to state health care advocates.

“It was an expansion, and it was helpful,” said psychiatrist Stephen Kemble, an advocate for universal health care in Hawaii.

Dr. Stephen Kemble in his office located at 600 Kapiolani Boulevard, Suite 402. 9 june 2017

Dr. Stephen Kemble has long been an advocate for expanding health care access.

Cory Lum/Civil Beat

According to statistics from the federal Health Resource and Services Administration, in 2010, about 38 percent of the patients lacked insurance at the Community Clinic of Maui in Wailuku, for instance, but only 14 percent were uninsured in 2015. Similarly the number of uninsured patients went from 53.9 percent at Waikiki Health Center in 2010 to 21.7 percent in 2015.


If Republicans succeed in cutting Medicaid, many people in the state could lose coverage, according to state health care experts.

“The impact on us would be quite devastating,” said Mohr Peterson.

Hawaii used the extra Medicaid money it received from the federal government, about $230 million per year, to expand the number of people in the state covered by Medicaid.  About one-third of the 350,000 people covered by Medicaid in Hawaii benefited from that expansion in federal spending, she said.

Peter Sybinksy, chief executive officer and president of the Hawaii Health Information Corp., said he worries about President Trump’s frequent suggestion that state insurance boundaries should to be erased to boost competition in the national insurance market.

Sybinsky fears that that if for-profit insurance companies are allowed to enter the market in Hawaii, it will place new financial pressures on nonprofit organizations like HMSA and Kaiser Permanente.

“It would wreak havoc here,” Sybinsky said. “All our hospitals are nonprofit; all our insurance companies are nonprofit. We don’t have the profit factor. There’s nobody making a profit out of health care in Hawaii.”

Some see the current health care debate as an opportunity for Hawaii to enhance the state’s own health insurance plans. This is a topic that Hawaii residents have raised at every town hall meeting held by congressional delegates since Trump was elected.

“We could do something to provide universal coverage,” Stemble said. “I have some hope.”

In fact, some states are already moving ahead on their own. In California, legislation has recently passed that creates a single-payer health system, although its further prospects are unclear. In Nevada, a plan has been proposed that would let people buy insurance through Medicaid.

Health care advocates say that officials in Hawaii need to begin preparing for what may come on the federal level.

“We need to come together and talk about what kind of health care system we want to have in place,” said Mohr Peterson, the state Medicaid director. “There are hard and challenging conversations ahead but we have a shared goal.”

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