Many uninsured meet rules for coverage

By Deborah Adamson
Advertiser Staff Writer

A survey has found that one-quarter of Hawai'i residents who do not have health insurance are adults working more than 20 hours a week for one employer, raising concerns that a number of companies are not complying with state law.

The Hawaii Institute for Public Affairs, a nonpartisan think tank, reported yesterday that of the 120,000 people in Hawai'i who lack health insurance, 31,000 are working adults who perhaps should be covered.

"We were very surprised. It was the first time we found that out," said Susan Au Doyle, chairwoman of the think tank's Hawai'i Uninsured Project Leadership Group.

Under the state's Prepaid Health Care Act, companies are required to provide health insurance for employers working at least 20 hours a week for four consecutive weeks. Union and government workers are exempt; the government arranges to insure its own workers, while unions negotiate coverage in labor contracts.

Hawai'i is the only state that has such a law. The Prepaid Health Care Act came into being in 1974, shortly before the federal Employee Retirement Income Security Act, or ERISA, which set uniform standards for employee benefits. ERISA does not require healthcare insurance for employees. Hawai'i asked Congress for, and secured, an exemption to ERISA.

The penalty for not complying with the Prepaid Health Care Act is a maximum of $1 per employee per day of violation, plus medical costs incurred by workers who should have been covered, said Nelson Befitel, director of the state Department of Labor and Industrial Relations.

"That 31,000 figure is a concern to us. What we need to do is to, as much as we can, verify those facts," he said.

Befitel noted one way in which employers might circumvent the law: by reducing employee work hours to less than 20 hours a week before four consecutive weeks have passed, then increasing them again.

Under such conditions, employers would not be breaking the law, he said. The law would have to be amended to close this loophole — which would be tricky, since any substantive change (as defined by the courts) could cost Hawai'i its exemption to ERISA.

In the meantime, the Labor Department is trying to inform workers about their rights under the Prepaid Health Care Act, and hopes to make it possible soon to file complaints online, Befitel said. For now, workers can phone in complaints to 586-9200 and should know that it is illegal for a company to retaliate against a whistleblower, he said.

The Labor Department also is expanding enforcement against violators of the law, not only pursuing complaints but also conducting random audits of employers and investigating industries that might operate in an underground economy, such as by paying workers in unreported cash.

The Prepaid Health Care Act has been heralded nationwide as a model to minimize the number of uninsured. But in recent years Hawai'i has fallen from first to seventh in percentage of a state's population with health insurance.

One reason, Au Doyle said, could be the gradual transition from an agrarian to a service economy, since unionized farm workers have health insurance.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.