Hawaii state and county workers face a medical premium increase of 29 percent this summer unless a government board can figure out a way to reduce costs and share the rate increases.

The Hawaii Employer-Union Employees Health Benefits Trust Fund is a board of 10 management and union members that handles the health insurance programs for 225,000 local workers, retirees and their dependents.

A new study prepared in January by Aon Consulting warns that rates must go up 29.4 percent.

John Radcliffe, representing the five union trustees, offered a plan to lower the increase to 10.5 percent by changing the rate structure and making other modifications to the plans.

Last week the trust fund board rejected the Radcliffe plan. Another meeting is scheduled for March 18.

“;We are out of time,”; said Radcliffe. “;If we cannot agree on what to do, all public employee health insurance in Hawaii ceases to be as of July 1.”;

Marie Laderta, trustee chairwoman and state human resources director, said the situation might not be that dire, although she said that if agreement is not reached at the March meeting, the state would be forced to try to negotiate extensions for all the insurance programs handled by HMSA, HMA and Kaiser.

Laderta said the state likes portions of Radcliffe's plan, saying, “;We are not that far apart.”;

“;Some of labor's own ideas are exactly the same as our ideas. Some of the ideas we have not considered, but conceptually they are not bad,”; Laderta said.

Radcliffe originally offered a compromise to both union and management to cut the rate increase in half, with both sides picking up half of the cost, which he said was rejected by both sides.

Management, Radcliffe said, wants to increase the portion of the medical insurance premium paid for by labor “;from an already high 40 percent to more than 50 percent.”;

“;The employer - meaning Linda Lingle, the governor - is refusing to pay one red cent more than is paid now, and wants public employees to pay for all of the increases or agree to decrease benefits by 29 percent,”; Radcliffe said.

As for labor, Radcliffe said the union members “;have not taken this seriously enough.”;

“;Unions take the position that they refuse to agree to the reality of the 29 percent rate increase and want it to go away.

“;They are not willing to agree to anything, either, except they want the benefits ... to continue on into the future at no increased costs,”; Radcliffe said.

Laderta predicted that the premiums are going to increase.

“;I think that is a good likelihood there is going to be some kind of increase,”; she said. “;We just don't know how much of the increase it is going to be.”;

The trust fund represents all state and county workers except for the public school teachers.

There are 60,000 active members and 30,000 retirees, with the remaining 135,000 spouses and dependents.

According to the trust fund's consultants, the big 29 percent increase is caused by rising costs of medical insurance and the past practice of the trustees to “;buy down”; the statewide insurance costs by using cash held in reserve.

“;We have learned that if rates continue to increase, buying down rates only delays future rate increases. ... We cannot catch up by buying down rates more,”; Radcliffe said.

His plan to lower the increase to 10.5 percent from 29 percent calls for lowering plan benefits so they match the average plans offered to private workers. The state plan is slightly more generous.

Radcliffe also wanted to impose a mandatory wellness program on all employees and beneficiaries, which consultants said would save 10 percent in just the first year.

The wellness program would require state workers and dependents to stop smoking, lower cholesterol levels and increase exercise.

Failure to meet those standards would cause employees' premiums to rise.

“;It would mean persistent failure to take better care of one's own health ... would mean that employees would be responsible for much of the cost of their own premiums and those of their beneficiaries as well,”; Radcliffe said.