Universal Vax for Hawaii

by Tom Yamachika, President, Tax Foundation Hawaii

One bill in our legislative session that was getting a lot of attention, at least with respect to written testimony, is Senate Bill 1434, Relating to Universal Immunization Funding Program. This bill is an Administration bill sponsored by the Department of Health.

The bill would establish a “universal immunization funding program” and an associated special fund.  The idea would be that the Department of Health would buy a bunch of vaccines in bulk along with equipment that would be necessary to preserve them, such as cold storage.  Those vaccines would then be distributed to everyone who needs them, at little or no cost to the patient or the patient’s family.  In that way, we would take advantage of economies of scale because of the bulk purchasing, and we would be able to distribute vaccines to people who can’t afford them, thereby saving on costly treatment costs and possibly saving lives as well.  According to the bill preamble, fourteen states have a similar program in place.

What doesn’t seem to be covered in the bill is how the vaccines in the program are selected, how they are going to be distributed, and to whom the vaccines will be administered.

And, when it comes to immunity, the State gives some to itself as well. One of the bill sections states that “there shall be no liability on the part of and no cause of action against the department, its independent contractors, or its employees for any action or omission in the course of operating the universal immunization purchase program.”  This is different from the general rule in chapter 662, HRS, which says that the State can be liable for negligence or intentional harms inflicted, but not for exercising the discretionary functions of government.  I guess that means they think people might be harmed through operating this program, and they want to rid themselves of all possible liability in advance.  How reassuring.

Then, someone or something needs to pay for these vaccines. So here is the funding mechanism: a new assessment (a new tax) against health plans and health insurers.  Specifically, the bill defines “assessed entity” as “any health insurer in the State, that is not federally funded, issuing individual and group accident and health or sickness insurance policies, individual or group hospital or medical service plan contracts, and nonprofit mutual benefit society, fraternal benefit society, and health maintenance organization health plans.”

For this aspect, we have to wonder why this program is not funded through normal tax revenue appropriated to the Department of Health like other programs run by the Department.  A tax on health care plans and insurers would certainly be passed on to employers and health plan members, and that tax would probably fall on ordinary workers and salaried employees more than anyone else.  In that respect, it would probably be more regressive than our current tax system (which is quite regressive as it now is).  And then, why is a special fund needed?  What is so different about this program that makes it impossible or impractical to fund through the normal legislative appropriations process that is set forth in the Hawaii Constitution?

As with a number of other bills this session, there are attractive aspects but also provisions that raise substantial concerns.