Making A Case For Coverage

Policy makers and interest groups unite to curb the rising numbers of uninsured people in Hawaii - a figure that has nearly doubled in the past decade

April, 2003

In the past 14 years, 58-year-old taxi driver Antonio Tabaldo has been to the hospital exactly seven times – once every other year for checkups, as required by his employer. Of those seven visits, Tabaldo had been issued a clean bill of health on all occasions except his most recent visit. The diagnosis: diabetes and high blood pressure.

News of the conditions frightened Tabaldo, but the words “diabetes” and “high blood pressure” were overshadowed by the realization that he had just incurred an additional monthly expense that he simply couldn’t afford. “I haven’t had insurance for 14 years, ever since I became a contracted taxi driver,” says Tabaldo. “No way I can afford the medication without insurance.”

It’s not that he hasn’t tried to obtain insurance, or that he wants to be uninsured, he just doesn’t have a choice. Tabaldo’s employer isn’t obligated to provide him with insurance under the state’s Prepaid Health Care Act, which requires employers to offer medical insurance to employees working 20 or more hours per week, but does not mandate part-time and contracted workers. And his $900-a-month salary is barely enough to pay for the maintenance of his cab, plus living expenses for his family – much less health insurance. His wife, who suffers from a kidney disease, is covered by Medicare, but when Tabaldo tried to enroll himself in the state’s QUEST program, he was rejected. “It’s kind of tough without the medical insurance, but what can I do?” he says. “I’ve tried to find help, but no one can help me. I am all alone in this.”

The truth is, Tabaldo is far from alone. In fact, he is joined by tens of thousands of other Hawaii residents living without insurance. While Hawaii had the lowest uninsured rate in the country in the early ’90s, the number of uninsured people in the state has nearly doubled in the past decade, rising from 6.1 percent in 1992 to 11.1 percent in 2001, according to the U.S. Census. That’s approximately 135,000 people, or the equivalent of the entire island of Maui, and the situation is worsening.

“Our state has gone through a pretty devastating recession, and the number of people who have lost their jobs has increased, which contributes to the loss of health care coverage,” says Cliff Cisco, senior vice president of Hawaii Medical Services Association (HMSA), offering one take on why the number of uninsured patients has increased so dramatically. “There’s also a number of small-business employers that hire people to work less than 20 hours a week so they don’t have to provide coverage.” On top of that, the state’s safety nets – community hospitals and government programs that are last resorts for the uninsured and underinsured population – have gaping holes.

The convergence of these factors has contributed to an alarming rate of uninsured people in the state, and the issue has become a focal point for an eclectic mix of policy makers, businesses, health care providers, social service agencies and so on. They’ve joined a coalition – the Hawaii Uninsured Project (HUP), an offshoot of the Hawaii Institute of Public Affairs – to generate solutions for this mounting problem.

HMSA began the project in 2000, but passed the reigns to HIPA, which now operates it on a $2.4 million budget, ($1.1 million from the federal government and a three-year, $1.3 million grant from the nation’s largest health philanthropy, the Robert Wood Johnson Foundation (RWJF)). So far, the funds have been used to conduct research and gather statistics. HUP discussion groups have analyzed the information and are brainstorming possible solutions and policy alternatives. Researchers from the University of Hawaii will then plug those solutions into various models to determine the impacts on the community.

In May, HUP will have a conference and hopefully come to a consensus on the solutions with which the organization wants to move forward. It’s hard to imagine a group with such disparate motives banding together in unanimity, but it truly is in everyone’s best interest to cooperate. A substantial number of uninsured people puts a drag on the entire economy in a number of ways. Workforce productivity goes down, uninsured patients seek care in the most inefficient ways (often utilizing emergency rooms in place of clinical hospitals), which creates a strain on the hospitals, and eventually becomes a taxpayer burden.

HUP members agree there isn’t a single panacea that will solve the entire problem. There are far too many groups that make up the uninsured population to bulk everyone together and wrap a blanket solution around it.

These are the top three groups that have been targeted as problem areas, and some of the solutions being floated to address their individual issues:

1 – Employed, but Uninsured
Even with the Prepaid Health Care Act in place, the breadth of employer-sponsored health coverage is proportionate to the health of the state’s economy. In Hawaii, businesses are still reeling from the slump in visitors and mass layoffs post 9-11. Particularly in small businesses, employers have gone out of their way to avoid having to insure employees.

“I actually had a boss who would work me 40 hours a week, but he’d alter my paychecks so it would look like I was working only 19 hours one week and 61 hours the next, just so he wouldn’t have to pay my medical,” says Shinji Salmoiraghi, a massage therapist. Neither of his two current jobs offers him medical benefits either. “I’ve recently purchased a short-term medical insurance plan from an online company, but I’ve been on-and-off, mostly off, medical for the past three years.”

His situation is far too common; an estimated 58 percent of the uninsured population in Hawaii is working individuals. Most of the recommended solutions have been about providing incentives (perhaps in the form of tax credits) to employers to expand medical coverage to part-time and contract workers. But one local company isn’t waiting around for legislative change; it’s offering a more immediate alternative to health insurance.

DirectCare Hawaii targets employed but uninsured individuals with its prepaid “cash for service” health plans. It works like this: patients pay doctors directly, immediately after services are completed; their DirectCare membership entitles them to a 25 percent discount. President and administrator Donald Dawson says, “It’s not insurance, but it’s an option for people who work and don’t have coverage.”

2 – Poor, but not Poor Enough
Twenty percent of Hawaii’s uninsured is made up of three groups: 1) People who don’t qualify for government-funded programs because they fall just outside of the state’s eligibility guidelines. Though not technically destitute enough to meet enrollment qualifications, most of them still don’t make enough to afford insurance; 2) People who are eligible for QUEST but can’t get in because of the enrollment cap of 125,000 people. The number of enrollees is currently 10,000 above the cap because of an exception for pregnant women and children, but until the number falls below 125,000, no new applicants are being accepted; and 3) People who are eligible but aren’t aware that such programs exist.

Another 7 percent of the uninsured is made up of children whose families aren’t quite poor enough to meet eligibility requirements.

The low-income bracket’s growing demand for government services is putting a big strain on an already ailing program. QUEST has had difficulties making poverty-stricken people aware of the program, and when they do apply, they are turned away because the program is underfunded, understaffed and under-resourced. Matching federal funds for QUEST are underutilized because the state hasn’t yet found a way to access all of the accessible resources. Increased government support for these programs is the only feasible way to discontinue the nonenrollment of eligible people and expand the program to include those outside the maximum poverty limits.

“One thing that would make life a lot better for low-income people and certainly for health care providers, would be if the state actually covered all of the people who are eligible,” says Beth Giesting, executive director of the Hawaii Primary Care Association. “If the state is saying ‘We can’t enroll them because we don’t have enough money,’ I just have to say, ‘Who on earth do they think does?’”

3 – Holes in the Safety Net
For those who slip through the cracks of government programs, community-health centers – collectively referred to as the state’s “safety net” – become their last resort for health care. Unfortunately, the state’s safety net is overabused and perilously lacking in resources.

The Hawaii Primary Care Association’s 10 community-health centers serviced 22,740 uninsured patients in 2001 – a 40 percent increase from 1997. During the same period, significant funding from the state increased only once – when the state allocated an additional $1.65 million to aid the centers post 9-11. They aren’t alone in the quest for more state funding. Hawaii Health Systems Corp., a state agency with 12 community hospitals focusing on acute, rural and long-term care, is seeking $40 million per year for 2004 and 2005.

“We don’t turn anyone away. But it’s becoming increasingly difficult for us to operate because we aren’t making any money,” says HHSC President and Chief Executive Officer Thomas Driskill. “Many of our patients don’t have any insurance, and 57 percent of our patients are in government programs. It costs us $35 million more to care for these patients than we are reimbursed.”

Some ideas for patching the safety net include creating a state fund to proportionately support safety-net providers for uncompensated service they provide to the medically indigent, and providing organizational and administrative support to networks of providers who provide free or low-cost services to the uninsured.

The scramble to solve the uninsured problem has thrust other options into the spotlight as well, such as the universal health care bill, which was introduced this session. Proponents of the bill believe pooling the premiums people pay for health insurance would patch the holes in the state’s disparate health care delivery system, allowing equal access for all Hawaii residents.

But other countries, such as Canada and England, have adopted such models, only to find that the quality of care goes down, while the costs don’t necessarily follow suit. “There are some people in the project who would love to see a simple, all-encompassing plan for the state, but there are lots who don’t feel it’s a sustainable or an affordable approach,” says HUP Director Joan White.

Even the governor and the state’s health director oppose the bill. “If you live in the United States, which is basically a capitalist society, there’s a realization that you have to allow the private-sector market to shake things loose a little and to collectively try to find solutions for very complex problems,” says Health Department Director Chiyome Fukino. “I do not believe the government should step in and try to control everything because quite frankly, we don’t do that well.”

Then there’s talk of reforming the health insurance market. Even though Hawaii’s dominant insurance provider, HMSA, keeps its rates about 40 percent lower than average Mainland rates, some of its representatives sit on the commission that regulates new entries into the market. Creating new mechanisms or venues for purchasing insurance might make it more affordable and accessible to more people.

Another discussion is centered around reforming the state’s Prepaid Health Care Act. Without straying too far from the act’s basic principles, HUP members are exploring what can be done to better distribute health care costs in a way that’s fair to both the employer and employee. But from a Mainland perspective, the act gives Hawaii an edge.

“It’s one of the things that attracted us; because part-time and contract-worker coverage is very much a national issue, and Hawaii now may be the state that creates a solution with national applicability,” says Vickie Gates, vice president of AcademyHealth, which administers the grant awarded by RWJF. Gates is impressed with Hawaii’s public and private sectors’ abilities to work closely together to solve the uninsured problem.

“They’re able to do that because they realize that we’re looking at targeted solutions, so it’s not just one blanket plan that we’re going to support or proposition that’s going to take care of the whole uninsured situation,” says Gwen Ouye-Nakama, associate director of policy and planning for HUP. “Each of the separate uninsured groups is going to take a different solution. There’s no magic bullet here.” But hopefully there’ll be several small ones.

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Jacy L. Youn