The health care reform package approved by the U.S. House last week may bear little similarity to the Senate version, if one emerges. In its final form, a reform measure should expand Hawaii's health care system, but separate federal and state legislation may be needed to prevent Hawaii's system from being dismantled as a result.

Three years after Hawaii's Prepaid Health Care Act was enacted in 1974, Standard Oil won a court ruling that invalidated the act as a violation of the federal Employment Retirement Income Security Act. Hawaii's congressional delegation saved the day by securing an exemption from ERISA through legislation.

However, the ERISA exemption would evaporate if any changes were made in the Hawaii health care law. The state law includes a provision that the law would “;terminate ... upon the effective date of federal legislation that provides for mandatory prepaid health care for the people of Hawaii.”;

The current federal health care reform would not provide an exemption of all “;the people of Hawaii.”; Sen. Daniel Inouye says he wants assurance only that Hawaii's system “;would not be rolled back”; by the federal reform. The House version includes a provision offered by Rep. Mazie Hirono that would achieve that status as long as the secretary of labor finds it to be “;substantially equivalent to or greater than the coverage”; under Hawaii's 1974 Prepaid Health Care Act.

Unlike the state system, the federal legislation would require citizens to have medical insurance or pay a fine, and that should include Hawaii. Rep. Neil Abercrombie points out that as many as 116,000 Hawaii families who can't afford insurance now would be provided tax credits helping them to do so.

All Hawaii businesses—small and large—are required now to provide and share the expense of health insurance for their employees. The House bill would exempt businesses with an annual payroll of $250,000 or less, which amounts to 4.7 million companies, or three of every four companies in the nation.

Hawaii's small businesses would continue to be required by state law to provide coverage; anything less would be what Inouye would regard as a rollback. Abercrombie says as many as 13,200 of the state's 15,000 small businesses would be eligible for tax credits to help reduce costs they now bear.

Hawaii now allows any business to deny health insurance to employees working less than 20 hours a week. The House bill would require an employer to either provide coverage by sharing in the expense or pay fines adding up to 8 percent of its part-time employee payroll. Under the Hirono amendment, the stronger federal requirement would be in force.

Abercrombie says the House bill also ensures that Hawaii residents, like fellow citizens across the country, cannot be denied health insurance because of pre-existing medical conditions. He says about 500 Hawaii families a year will escape bankruptcy caused by steep medical costs.

And the county and state governments will no longer be billed $69 million a year—an average of $700 in family insurance premiums—to pay for uncompensated medical care.

Those effects on Hawaii's health care law may require that Hawaii's congressional delegation replicate its action of three decades ago to keep the system in operation.