State panel passes
mandatory health
insurance bill study

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By Lyn Danninger
ldanninger@starbulletin.com

The state would undertake a study to assess the effects of mandated health insurance coverage in Hawaii, under a bill passed yesterday by a joint legislative committee.

But legislators referred for further discussion a separate bill that would increase the amount an employee can pay toward the cost of employer-provided health insurance premiums.

Given ever-increasing health care costs and increasing financial burdens on businesses since the Pre-Paid Health Care Act first became law in 1974, the House committees on Labor and Public Employment, and Economic Development and Business Concerns agreed with those who testified in support of HB2835 -- that it's time the state determine the social, medical and financial impacts of mandated coverage.

The bill, which does not appropriate any money for the study, still faces more hearings.

More problematic for the committee was what to do about HB2750, which would set the maximum employee contribution to health insurance at 40 percent of the total monthly health care premium. Currently, employees may pay no more than 1.5 percent of their gross monthly wage toward the cost of a medical plan.

If passed, the bill would allow private employers the flexibility to pay 60 percent of the cost of health care premiums for up to two years, while employees pay the remainder.

Those who testified in support of the bill referred to the existing legislation governing employee contribution levels as being "frozen in time."

"Something has to be done," said Bette Tatum, state director of the Hawaii chapter of the National Federation of Independent Business. "We are asking for flexibility only for two years and this would at least provide direct, immediate, temporary relief."

Tatum said she knows of some small businesses who pay up to $800 a month for individual coverage. Other small businesses cannot even get health insurance, she said.

Kaiser Permanente's Chris Pablo said while his organization supports the intent of the bill it would prefer to see a review of Hawaii's mandated system of health care coverage first. Likewise, the Hawaii Medical Association's Paula Arcena said that the group supported the bill's intent only as a short-term solution.

"We prefer a long-term solution," she said. "Costs will continue to rise and although we generally favor free-market solutions we would prefer a re-evaluation of the Pre-paid Health Care Act. ... We also suggest creating a task force for consumer-driven solutions."

But the state Department of Labor and the Attorney General's Office raised concerns about whether making a change to the law by increasing employee contributions would jeopardize the Hawaii's exemption from the federal Employee Retirement Income Security Act, more commonly known as ERISA.

Hawaii has a special exemption from the law, which sets national health insurance regulations, since state law requires minimum health insurance levels higher than those required by ERISA.

Other bills heard during the joint hearing and referred for further discussion included proposals to outlaw so-called non-compete agreements in Hawaii's technology business arena and a proposal that would require anyone who purchases a business to retain existing employees.

Employees who were terminated after the Hawaiian Waikiki Beach Hotel came under new management testified in favor of HB1966. But the state Department of Labor said that while it sympathized with the plight of the displaced workers, any change to existing law would be especially burdensome to small businesses.

HB2641, relating to non-compete clauses, would help those working in Hawaii's technology businesses, proponents say. The bill would void restrictive agreements that make it difficult for technology workers to remain in their chosen field if they change jobs.

The former president of high-tech firm Adtech, Tareq Hoque, told the committee that employment agreements containing non-compete clauses are now commonplace and are bad for the development of Hawaii's fledgling technology industry.

Most agreements are signed under threat of termination, said Hoque, who is now chairman of the Hawaii Technology Trade Association.

In the end, non-compete clauses force tech employees who leave their jobs to either exit the industry or move to the mainland, he said.

"I call it 'slash and burn.' Not only are you out of a job you are cut off from working in your field," he said. "Contractual restrictions that prevent movement are wrong."

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