Hawaii’s financial problems are serious enough that the state might have to explore a single-payer model for medical insurance for state workers.

Abercrombie, running in the Democratic gubernatorial primary against Mayor Mufi Hannemann, was asked during a speech to the Downtown Exchange Club meeting at the Oahu Country Club how he would handle the state’s unfunded liability for the retirement system.

While saying the retirement system is a concern, the real problem facing Hawaii is the rising cost for health insurance for state workers, Abercrombie said.

"We are going to have to come to grips with the idea of the state figuring out the entire health care payment system," Abercrombie said.

"It is not going to happen unless we come to grips with trying to get a handle on rising health care costs."

A single-payer system would have either the state or some other entity, instead of private insurers like the Hawaii Medical Service Association or Kaiser Permanente, providing health care.

"The state will have to come to grips as to whether or not it itself will go into a single-payer plan in order to salvage any kind of capacity for the state employees," Abercrombie said, adding "we can’t have the insurance companies dictating to us what they will provide."

The state finished in 2006 a one-year study of a single-payer model, which found that if everyone in the state, not just state employees, were in the plan, it would save money for employers but would require workers to pay a special payroll tax of up to 9.5 percent.

State Sen. Josh Green (D, Milolii-Waimea), who chaired the study group, said "it would take a giant leap of faith and political courage" to take the private insurance companies out of the picture.

"The question is, Do you have the guts to transition the system radically away from private insurance models?" Green, a physician, said.