April 4, 2008

The Other Problem with the Roberts Healthcare Plan

Carroll Andrew Morse

There is very little chance that the core of Lieutenant Governor Elizabeth Roberts' healthcare plan, if passed into law, would survive a court challenge. The doomed element, described by Cynthia Needham of the Projo, is the requirement that...

Businesses with more than 10 employees would be expected to purchase insurance for their workers, or face fines.
Here's the technical description of the employer mandate from the legislation itself...
28-43-8.7. Health security assessment. -- (a) Each employer, except those employers employ ten (10) or fewer employees, subject to the provisions of this chapter shall be required to pay, in the same manner and at the same times as the director prescribes for the other required by this chapter, in addition to any other contributions required under this chapter, a health security assessment of each employee of eight percent (8%) of the taxable wage as defined in section 28-43-7, in addition to any other payment which that employer is to make under any other provisions of this chapter...

(b) An employer may deduct from the amount owed for each employee under subsection (a) its average expenses per employee for providing health insurance coverage or other health care benefits for its employees, allowable for the current quarter by the Internal Revenue Service as a deductible business expense;

The problem is that the Federal courts have consistently struck down state attempts to mandate health insurance by private employers for conflicting with the Employee Retirement Income Security Act of 1974 (ERISA), which makes it illegal for states to regulate employee benefits any more stringently than the Federal government does. Last year, the Fourth Circuit Court of Appeals nullified a Maryland law that would have required employers bigger than a certain size to pay a certain percentage of their payroll towards health benefits. The Fourth Circuit's ruling did not depend on the details of the mandate, who was affected or how much they had to pay. Just the fact that Maryland was trying to require a particular employee benefit was enough to run afoul of Federal law...
Because Maryland's Fair Share Health Care Fund Act effectively requires employers in Maryland covered by the Act to restructure their employee health insurance plans, it conflicts with ERISA's goal of permitting uniform nationwide administration of these plans. We conclude therefore that the Maryland Act is preempted by ERISA and accordingly affirm [the lower-court decision to strike it down].
Bottom line: because of ERISA, whether you like it or not, states are not allowed under current Federal to mandate any employee health benefits.

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This is exactly as much chance of passing as the rapidly being forgotten "funding formula".

Posted by: Mike at April 4, 2008 6:49 PM

In the State of Hawaii any business employer whose employees work 20 or more hours a week is required “legally” under state law to provide employees with health insurance.

The Republican governor and Democratic general assembly worked together for the good on the state population without politics getting in the way, raising taxes, alienating special interests, hospitals, medical profession and health insurance companies. The system is still being fine tuned.

This is one of the reasons State of Hawaii of all the 50 states is closest to universal health care for all state citizens (some say 96% and some say 90% population is now covered). Hawaii also has one of the lowest state-wide unemployment percentages in the nation and is one of the most isolated population center in the world.

Posted by: Ken at April 4, 2008 7:43 PM

"states are not allowed under current Federal to mandate any employee health benefits."

Then why on earth is that atrocious law in Mass still in effect??

Posted by: Monique at April 4, 2008 8:54 PM


Let me say this one more time, in the State of Hawaii any business employer whose employees work 20 or more hours a week is required “legally” under state law to provide employees with health insurance.

If you, Carroll or any other person has a problem with how State of Hawaii and its elected officials run the state then my understanding is Hawaii is always open to comment but if you want to impose your will on Hawaii and its people you just might be in for a rather big surprise.

Posted by: Ken at April 4, 2008 9:43 PM

Monique and Carroll,

Hawaii "state law" requires business to provide health insurance to employees working 20 or more hours each week.

Before you announce to the world, do your homework.

Hawaii's Prepaid Health Care Act of 1974 is the only act of its kind in U.S. history. Since Jan. 1, 1975, this law has required nearly all employers to provide health insurance to their employees who worked 20 hours or more a week for four consecutive weeks. Employees must maintain the minimum of at least 20 hours a week to remain eligible.

ERISA and the Prepaid Health Care Act
Hawaii's Prepaid Health Care Act passed the same year as the federal Employee Retirement Income Security Act (ERISA), which superceded all state laws related to employee benefits. When Standard Oil sought to invalidate employer-mandated health coverage in Hawaii, it sued and won. Hawaii's congressional delegation stepped in and won an exemption from ERISA. However, this Congressional action stipulated that no substantive changes could be made to the Prepaid Health Care Act as it was passed in 1974.

Posted by: Ken at April 5, 2008 1:02 AM

Hawaii is an island in the middle of the Pacific Ocean. Despite the name, Rhode Island is not.

I might also remind you that nearly everything in Hawaii (other than pineapples) is a lot more expensive than on the mainland. The cost of all these mandates you tout as great are just costs passed [mainly] on to tourists by those employers. There's nothing magical about that. Essentially, in Hawaii most employers are equally disadvantaged by the mandate, so it's net competitive disadvantage is minimal. However, when you're a tiny state with two neighboring states, and within driving distance of a dozen more, the math changes.

Posted by: Will at April 5, 2008 1:37 AM


Rhode Island is and island all to its self in “mindset”! Don’t forget, you’ve got people that have never left Aquidneck Island; just as Hawaii is one of the remotest population islands in the world. Rhode Island never outwardly competed against Massachusetts and Connecticut when I was growing up until recently and the worst thing to happen to Rhode Island was banking on the Lottery and VTLs for consistent income.

I spent over 60 years living in Rhode Island. Hawaii (ranked 43 in size) according to 2007 AAA study is the most expensive state to vacation in for a family of four and Rhode Island (ranked 50 in size) is ranked number three most expensive state to vacation in for a family of four. You do the math as to why. Our Hawaii hotel rooms average $217 a night and Newport, RI averages $220 per night. On my island we have over 135 free clean beaches with free clean parking, life guards, free clean showers, free clean bath houses and free clean picnic grounds with connecting public bus service. As a matter of fact, Honolulu is ranked 27 in the world cleanest city to live in.

And yes, we who live here pay the same price for goods and services as the tourist do. As a matter of fact, we have no sales tax but a 4% general exercise tax on all goods and services for-profit and non-profit with one exception prescription drugs. We pay taxes on stuff you don’t pay in Rhode Island.

Yes Hawaii has an international tourist industry however; it is not the number one producer for state income. I moved to Hawaii because of quality of life which Rhode Island was failing to provide. An off shoot was to experience overall lower taxes in Hawaii because of age and better government services. However, Hawaii has a higher outright cost of living but overall, I’m finding not as bad as Rhode Island is now.

Most of all, everyone in Hawaii is considered a minority and there is no majority ethnic group (all 122 ethnic groups are represented). There are no ethnic neighborhoods to create divisions and descent in the population. There is immigration but nobody is whipping it up into a frenzy like Rhode Island is. People respect each other here and if you can’t show respect, you will not last long trying to live in Hawaii.

Why do I add comment to Anchor Rising, because of 60 years living in Rhode Island and being able to compare firsthand to other states.

Outside of that, 81 F; sunny 350 day a year slow living; life is good!

Posted by: Ken at April 5, 2008 3:06 AM


To quote a one of the hosts from the regional sports talk behemoth, “you’re makin’ my point”. The Hawaii healthcare plan has an express exemption from ERISA granted by Congress. So unless Hawaii annexes Rhode Island, the state government here can’t mandate employee benefits any more stringently than the Federal government does.

I’m not saying that’s a good thing. I’m saying that’s what the courts have consistently ruled.


The key to the Massachusetts plan is that it’s a mandate on individuals, not employers. ERISA applies only to employer-provided benefits, so as long as there’s no provisions in the Massachusetts law requiring employers to provide health insurance (or face penalties if they don’t sell insurance), there’s no conflict.

Again to reiterate to everyone, I’m not saying that any of this makes sense, just that it’s what the courts have interpreted ERISA to mean.

Obviously, I haven't been writing enough posts on ERISA lately...

Posted by: Andrew at April 5, 2008 10:10 AM

"The key to the Massachusetts plan is that it’s a mandate on individuals, not employers."


You VILL have health insurance.


Mitt & the Dems in the Mass Legislature

Posted by: Monique at April 5, 2008 3:22 PM

Now, now. If you are less unlucky than you could be if the dark side wins, Mitt might be your VP.

PS - thanks to all for explaining some of the twists and turns in our oh so busted health care system and the putative fixes.

Posted by: chuckR at April 5, 2008 9:36 PM

But Andrew...

In Hawaii, all schoolchildren are required "legally" to study ERISA in depth. That's why there are no "twists and turns" on the islands, and why people with pensions from other states live so well (because along with healthcare education is taught karmic respect for elders who bring in their own revenue sources).

But most of us would never make it in Hawaii, because we don't respect comprehensive ERISA/pensioner education and, not being able to live "aloha," will not last long trying to live there. (I think that means the good people of the islands throw rabble-rousers in a volcano.)

I'm starting to think that the best thing the government of Rhode Island could do for our underprivileged citizens and illegal immigrants would be to give complementary one-way tickets to Hawaii to the former and to deport the latter not to their home countries, but to that distant state in the ocean.

What do you think, Ken? Room for a few hundred thousand more?

Posted by: Justin Katz at April 5, 2008 10:29 PM


If that is what you want the State of RI to do start sending! Average one-way plane ticket is $1,000 and from RI and it will take you 14 hours travel.

I don't know how that will solve you state budget problems.

Average single family house is $600K and condo about $44oK. You can rent if you find something open at $1,500 and up (most good stuff is about $3K) a month. Hotels average 75% bookings so there are rooms.

Average family of 4 needs about $65K a year to break even on living expenses.

As a matter of fact there is a building boom going on in Honolulu. About 80,000 new single family homes are being built in one area and a new city (about 22 city blocks) with office towers, hotels and the second largest shopping mall next door to a new tourist area with 10 new hotels including a Walt Disney 800 room resort. 80,000 new jobs plus the 30,00 jobs the new commuter light rail system being built are projected starting next year. There will be new schools and city services, parks and golf courses added.

So yes Justin, if RI is going to pay to send; send them on!

I still purchase my healthcare from Rhode Island and still pay RI income taxes.

You see Justin, 30 years of planning does pay off when you can retire early and live in 80 F weather; 350 days of sun year round on white sandy not crowded beaches that are free with very pleasant people, 100-400 foot waterfalls in the back yard and humpback whales playing in the ocean out your living room window

PS; The active volcano is only on one island. You would die from heat and the gas before you got to the edge. If you’re interested the “Aloha sprit” has a high tolerance for rabble-rousers. Aloha reflects on all of us who live in Hawaii and accept guests to the islands.

Posted by: Ken at April 6, 2008 12:07 AM

Well, perhaps Ken's provided another solution: how about a $1,000 entry fee to the state of Rhode Island?

Unlikely, I know, but perhaps it's somewhat more likely that we'll all agree about the high level of inapplicability of Hawaiian lessons to Rhode Island's problems.

Posted by: Justin Katz at April 6, 2008 1:09 PM


You probably don’t know this but you better include about $10,000 dollars to move home goods (car/truck not included) from Rhode Island to Hawaii on top of $1,000 dollar airplane ticket and plan on averaging $500 a day living expenses till you find a place to live and work.

Hawaii will never be Rhode Island and vise versa because two different state constitutions and government operations. However, if RI wants to get out of the budget hole they might want to look at the way some things are done out here.

Hawaii has a county seat of government. There are four counties in Hawaii (Kauai; city and county of Honolulu; Maui; and Hawaii). Each city has a mayor and council in charge. A lot more is accomplished in Hawaii with a smaller government foot print even though the state is a lot larger than Rhode Island. Hawaii has very, very stringent conflict of interest and ethics laws which are enforced.

There is one public school district for the whole state. The curriculum is standards based with published standards per grade, curriculum and expected student educational goals

Honolulu is the largest city in the world -- at least it has the longest borders. According to the state constitution any island (or islet) not named as belonging to a county belongs to Honolulu. This makes all islands within the Hawaiian Archipelago, that stretch to Midway Island (1,500 miles northwest of Hawaii) part of Honolulu. Honolulu is about 1,500 miles long or more distance than halfway across the 48 contiguous states and from east to west Hawaii is the widest state in the United States. Hawaii also has the most southern point of land in the nation; 11 weather systems know to man can be found on one island and the world’s largest wind generator is on the island of Oahu.

Hawaii has two official state languages; English and Hawaii. According to 2000 US Census Bureau population over 5 years old is 1,134.351 and those who speak only English are 832,226 and those who speak a language other than English is 302,125 which include over 39 recognized world languages. Hawaii leads the nation for population who are comprised of two or more races.

According to US Census 2006 Percent of Households with Retirement Income survey, the top three percentage states households reporting retirement income are West Virginia (24.2%), Delaware (23.3%) and Hawaii (22.2%) in that order. Florida is tied in 11th place and Rhode Island is tied in 23rd place. http://factfinder.census.gov/home/saff/main.html?_lang=en

What really makes this state so unique, if you have a disagreement or problem you just can’t walk to the next state to cool off so people here really work towards reaching consensus.

Posted by: Ken at April 6, 2008 7:43 PM
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