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Feds need to ensure integrity of Hawaii’s health care law

The state Legislature has prudently altered Hawaii’s 36-year-old trailblazing health care law to protect it from termination when the federal law takes full effect in 2014.

Congressional action now may be needed to fully assure the continuation of the state law, which would be enhanced by the federal statute.

Hawaii’s congressional delegation sought to preserve the state’s employer-based health insurance law by amendment to the federal health care act signed by President Barack Obama in March 2010.

However, the state law contains language aimed at terminating upon the effective date of a comprehensive federal health care law. That is scheduled for Jan. 1, 2014.

The state law’s termination provision followed a court ruling that it violated the federal Employee Retirement Income Security Act, the regulation of employment benefit plans.

Hawaii’s congressional delegation secured an exemption from ERISA in 1974 on condition that the new state health care law would disappear upon enactment of a federal health insurance mandate proposed by then-President Richard Nixon.

Nixon’s proposal collapsed amid Watergate and the Hawaii’s health care law’s existence remained.

A year after then-President Bill Clinton proposed a federal health care act in 1993, the state Legislature approved an amendment aimed at removing the termination clause in the event of the specific federal law that was expected, but Clinton’s proposal also died.

U.S. Sens. Daniel Inouye and Daniel Akaka have said they amended the present federal health care law to preserve Hawaii’s ERISA waiver. However, the Abercrombie administration is not sure about its effectiveness. Deputy Attorney General Gary S. Ige testified to a state House committee in February that his office opposed erasing the termination provision because such a move would be "subject to preemption by ERISA."

A week later, Ige submitted written testimony backing away from opposition to the proposal although continuing to express concern that it "would likely be subject to preemption by ERISA."

That being the case, Hawaii’s congressional delegation needs to make sure that the ERISA exemption would survive application of the federal health care law.

The present federal health care law allows Hawaii requirements to prevail in areas where they are stronger, such as the state requirement that all employers offer health insurance. The federal law will exempt businesses with fewer than 50 employees. However, small businesses in Hawaii will qualify for federal tax credits for providing health insurance.

Jennifer Diesman, vice president of the Hawaii Medical Services Association, reminded legislators that "the shift in the balance of power in Washington confounds (affordable health care) efforts and confuses what health care reform eventually will cover."

That is why the importance of protecting Hawaii’s health care law grows as the future of the federal role becomes uncertain.

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