THE PROSPECTS FOR STATE-LEVEL REFORM

Although the ACA mandates many elements of health care for the states, it also gives leeway for states to begin or continue their own reform efforts, some of which in the end may become models for national reform. So far, Vermont is the only state to have declared health care a right and to have seriously considered adopting a single-payer system to operate under the ACA. Those plans are currently on hold, however. Vermont, though, is an unusual state, which leans heavily Democratic, and so few expect other states to follow its lead.

Hawaii offers another model for reform. In 1974, Hawaii’s legislators passed the Prepaid Health Care Act. Unlike the ACA, which is based on an individual mandate, Hawaii’s program is based on an employer mandate—that is, on the requirement that all employers offer health insurance to their workers and pay a specified percentage of the costs. Hawaii requires employers to pay at least 50% of the cost for any employees who work at least 20 hours per week for four consecu- tive weeks. In addition, most employers voluntarily insure employees’ families and pay more than their required 50% of costs.

The willingness of Hawaiian employers to care for their employees may reflect unusual aspects of Hawaii’s history, geography, and culture. The state’s geographic isolation makes it difficult or impossible for employers to move elsewhere, and decades of paternalistic control by pineapple plantation owners had established the idea that employers had some responsibilities to their employees—a concept reinforced by Hawaii’s relatively strong unions. In addition, Hawaii’s employers may share the common Hawaiian belief that all residents of these isolated islands should be treated like members of a family.

As in other states, elderly persons and extremely poor persons receive their health insurance from Medicaid or Medicare. Unemployed persons and part-time workers who earn too much to receive Medicaid but too little to purchase insurance on their own instead can get insurance through the federal exchange previously discussed, helped by hefty subsidies provided by the Hawaiian government. As a result, 97% of Hawaii residents are insured.

Because such a high proportion of the state’s population is insured, insurers can use community ratings rather than risk ratings—keeping rates affordable for all purchasers—and still remain financially viable. In fact, both insurance premiums and costs per Medicare enrollee are among the lowest in the nation, although they have risen significantly over the last few years.