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StarBulletin.com

Close gap to include part-timers


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POSTED: Thursday, July 16, 2009

Having blazed the trail to an employer-based health care system, Hawaii is likely to be least-affected by federal legislation aimed at assuring health insurance for most Americans. Still, both Senate and House bills would improve Hawaii's system by closing a gap that has prompted some companies to hire part-time employees to avoid paying most of the cost in insurance premiums. State legislators should be prepared to change Hawaii's law to work part-timers into the state's format.

Since 1975, Hawaii has required employers to provide health insurance to full-time employees, defined as those who maintain a work week of at least 20 hours. Employees pay no more than 1.5 percent of their wages, while the employers pay for the remainder. An analysis last month by the Federal Reserve Bank found that the mandate “;increased reliance (by employers) on the exempt class of workers who are employed for fewer than 20 hours per week.”;

The state's law at first reduced Hawaii's uninsured rate from 30 percent of residents to 5 percent, lowest in the country. Insurance costs in lower brackets increased from 8 cents an hour in 1979 to 43 cents an hour in 2005, inflation adjusted, the researchers noted. Some employers were moved by the increase to hire part-time employees, which contributed to the uninsured rate rising to 10 percent of the population, eighth lowest, according to the Hawaii Uninsured Project.

A “;Health Choices”; bill unveiled Tuesday by U.S. House Democratic leaders would require employers to pay at least 72.5 percent of health-insurance premiums for individual coverage and 65 percent for family coverage of full-time employees. Employers would have to make a minimum contribution “;that reflects the proportion of the average weekly hours”; of the part-time employee compared with that of a full-time worker. The bill does not say what constitutes “;full-time,”; leaving that to the Health Choices commissioner.

A bill approved yesterday by the Senate Health, Labor and Pensions Committee would require employers with at least 25 employees who pay less than 60 percent of their employees' premiums to pay fees to the government of $750 a year per uninsured full-time employee and $375 a year per uninsured part-time employee. Full-time is defined as working at least 35 hours a week.

The House bill exempts employers with payrolls of less than $250,000 and provides reduced penalties for those with payrolls up to $400,000 for not sponsoring health insurance. Employers with larger payrolls would have to pay a penalty of 8 percent of wages for not participating.

The legislation faces heavy criticism, not because of the inclusion of part-time workers, but because of what Republicans and business groups complain would be its burden on small employers, creation of a government-operated health plan competing with private insurers and its high cost. The Congressional Budget Office predicts the House bill would cost more than $1 trillion over 10 years.