A proposal approved by this year’s Legislature is aimed at removing a part of the state’s health care law that calls for its termination as a result of a federal health care system taking effect. The state legislation makes sense — but Gov. Neil Abercrombie is prudent in putting it on his possible-veto list until he is sure the bill won’t have the unintended consequence of striking down Hawaii’s 37-year-old trailblazing law.
The federal health care law does appear to contain language aimed at protecting Hawaii from such a consequence. But Deputy Attorney General Gary S. Ige sounded an alarm to legislators this year that the bill, which would erase a small but crucial clause of the Hawaii Prepaid Health Care Act, could doom the state health care law. Further, Ige made no mention of the fact that the federal law signed by President Barack Obama last year includes a clause aimed at protecting Hawaii’s health care law from being terminated.
Asked about the federal clause, an Office of Attorney General spokesman said Friday that it "accomplishes that goal" of protection.
The issue stems from a 1976 lawsuit against the state by Standard Oil Co. contending that Hawaii’s health care law requiring companies to provide medical insurance to their employees violated federal law. The Employee Retirement Income and Security Act, enacted by Congress in the same year as Hawaii’s health care requirements became state law, regulates all pension and benefit plans.
Standard Oil argued that Hawaii’s law was superseded by ERISA’s authority and won the case in federal court in 1980. Two years later, Hawaii’s congressional delegation won legislation exempting the state’s health care rules from ERISA’s control. The exemption contained a caveat that it would vanish upon any substantive changes in Hawaii’s health care law.
The bill approved by this year’s Legislature would remove a clause in the state health care law that it would "terminate" upon the effective date of federal health care legislation. The termination clause in the original bill was prompted by a federal health insurance mandate proposed by then-President Richard Nixon and amended in 1993 while then-President Bill Clinton proposed a health care act. Of course, neither proposal was enacted.
Abercrombie has placed the bill on his list of possible vetoes, notifying legislators that "further investigation is needed on whether the approval of this bill would have unintended consequences" by eliminating Hawaii’s ERISA waiver.
In fact, the new federal health care law contains a clause that it will not "be construed to modify or limit the application of the exemption for Hawaii’s Prepaid Health Care Act" by ERISA. U.S. Sens. Daniel Akaka and Daniel Inouye have said the clause protects the Hawaii law from ERISA regulation.
There does not seem to be a need for the veto — so if he proceeds with one, the governor needs to explain why he regards the federal clause to be inadequate, despite yesterday’s opinion by the Attorney General’s Office. And if so, he should explain what is needed to make certain that a state measure aimed at protecting the islands’ successful health care policies would not instead cause them to collapse.