Business Law Governor Lingle, it Has Come

Business Law

Governor Lingle,

It has come to my attention that as a result of your newcomer status in the governor's office, you are seeking guidance from your task force regarding the effectiveness of current statutes in the state of Hawaii. I have chosen to emphasize one particular law that is wreaking havoc on the overall business climate within the state. The state-mandated Prepaid Health Care law of 1974 requires that all businesses must provide medical insurance benefits to all employees who work more than twenty hours per week. On the average, the cost per firm is $2,200 per person on an annual basis (Cook 130). The law has established minimum standards for coverage, including hospitalization, surgery, office visits, diagnostic tests, and maternity benefits (Department of Labor and Industrial Relations 1). Furthermore, the law requires that employees should not be held responsible for more than 1.5% of the insurance costs (Department of Labor and Industrial Relations 1). For many small businesses, this mandate is interfering with potential profitability and growth because many small employers are unable to afford the skyrocketing costs of this insurance. In addition, such detriment is unacceptable because small businesses are the key factor to economic success in the state of Hawaii. If it is allowed to continue, this mandate will eventually result in the downsizing or even failure of many small businesses.

Please consider a revision of this law that would provide benefits for small businesses that constantly struggle in an unstable economy. By allowing small businesses to have the option to require employees to contribute more than 1.5% of their regular wages to health insurance benefits, all parties will reap the benefits.

Another viable option is for employers to have the option to offer health insurance benefits to their employees. As health care costs continue to escalate across the United States, it is evident that insurance premiums will continue to rise. If this law continues, businesses will be required to absorb the excess costs that result from increased utilization of the health care system in Hawaii. In addition, Hawaii possesses some of the highest administrative health care costs in the country, resulting in many economic difficulties (Matthews 12). Finally, since small businesses directly suffer from the impacts of this state-mandated program, they must do whatever is necessary in order to reduce costs. Typically, the employees suffer from the effects of the cutbacks in the following ways (Matthews 12):

Restricted or nonexistent wage increases

Reduction of other employee benefits

Price increases for products and services

In addition, many employers do not maintain full-time staff members because if they hire employees that work under twenty hours per week rather than full-time, they will not have to pay for the increasing costs of their health insurance premiums. This, in turn, limits potential economic growth because employees are not able to receive sufficient salaries for living expenses, and with the tax structure that is in place in Hawaii, it is often very difficult for the average family to survive. Furthermore, when fewer employees are available to perform the work, the result is evident in the lower production of products and services and this affects overall economic growth.

Governor Lingle, please consider that although this mandate is the most closely-related program to universal health coverage that exists today, it is not the most effective means by which Hawaiian residents should receive health benefits. Other means that provide health insurance coverage are possible that protect employees and small businesses from economic disaster, and many states in the Continental United States implement successful programs that work effectively in providing guidance in maintaining health insurance coverage for employees in need.