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...

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…