Affordability in a mandated environment

To identify insights gained from Hawaii's experience with healthcare costs in an environment of mandated employer-based coverage and implications for other states as implementation of the Affordable Care Act ramps up.

Case analysis.

We reviewed literature on healthcare costs in Hawaii and analyzed descriptive statelevel and national data from a variety of sources, including MEPS and Hawaii's Department of Commerce and Consumer Affairs. In addition, we conducted 14 interviews with 12 stakeholder organizations in Hawaii's healthcare market, including representatives of health plans, delivery systems, physicians, employers, government, the non-profit sector, and academia.

After almost 40 years of mandated employer-based coverage, Hawaii has a lower uninsured rate than other states and lower employer-based premiums. Stakeholders we interviewed attributed lower costs in part to the concentrated insurance market, in which the dominant carrier acts largely like a single payer in the commercial market; stakeholders raised administrative cost efficiencies and negotiating clout as factors contributing to lower employer-based premiums. While premiums are lower than the US average, the rate of growth in costs is not. As a result, Hawaii's healthcare stakeholders are focused on aligning incentives for payers and providers.

Based on interviews with stakeholders and the review of current data, we conclude that mandated coverage will not slow the inexorable rise in healthcare costs or solve the growing affordability issues for health insurance in the United States. To expand access to coverage in a manner that is sustainable over time, healthcare cost growth must be addressed.