Hawai'i's health care system was put firmly on the national map in 1974 when the Legislature passed the Pre-Paid Health Care Act, a groundbreaking move toward universal health care coverage. It mandated that all employees working 20 hours a week or more be offered health care insurance through their employer.

Costs were to be shared.

The program was so far ahead of the curve that it had to be granted a special exemption from the federal Employee Retirement Income Security Act, which sets national guidelines for employee benefits.

Many have suggested that the Hawai'i system is a model (or at least a starting point) for a national universal health care system. But it has its critics as well. Some suggest it is too generous. Others point out that there are loopholes through which employers can escape their obligations under the law.

And because it is a creation of the Legislature, it has been larded up over the years with more and more benefits, all adding to costs.

Now, an "economic letter" out of the Federal Reserve Bank of San Francisco raises new questions about the Hawai'i plan and its role as a potential model for a national system.

The letter, or white paper, suggests that the Hawai'i plan has certain built-in flaws.

The first and most obvious, perhaps, is the portion that mandates coverage only for employees who work 20 hours a week or more. The natural result: Many employers keep their payroll down to more people each working fewer than 20 hours a week.

But a more subtle point is made as well. The authors of the study point out that a growing number of employers offer health insurance benefits as a matter of course, not because the law (as it does in Hawai'i) demands it. Thus, the unique Hawai'i law has relatively little effect on the significant percentage of workers who — by job category, income or other characteristics — would be likely to get insurance at work in any event.

The big difference is among those who are less likely, statistically, to quality for health insurance at work — typically lower wage employees. This group is covered at more than double the rate for similar workers in other states, the paper says.

That's the good news. Folks starting out or at the low end of the wage scale are more than twice as likely to get health care insurance through work in Hawai'i as are their counterparts elsewhere in the country.

The bad news: Some employers will do what they can to avoid this cost. So while the Hawai'i mandate has substantially increased health insurance coverage overall, it has driven a shift to part-time workers — those who get fewer than 20 hours a week.

The paper concludes, then, that employer mandates are not an effective way to achieve universal coverage. The answer may lie elsewhere, the authors argue.

But there's another way to look at this. What if there was no exemption for people working fewer than 20 hours a week? What if the mandate applied to every employee, no matter what the hours worked? There are cost implications to this scenario, to be sure.

But there are cost implications to all of society when a sizable percentage of the population has no health insurance at all. That's what policymakers, both locally and nationally, have to confront.