Hawai'i could provide universal healthcare and trim $555 million from its estimated $8 billion in annual healthcare spending if it converted to a "single-payer" system similar to that of Canada and Great Britain, a consultant told a state healthcare task force yesterday.

The model is still being refined but suggests that private companies would pay slightly higher healthcare costs and workers would have to pay a new payroll tax of about 5.6 percent to make the system work financially. The expected savings would come mostly from lowering administrative costs and from bulk purchases on prescription drugs and medical equipment.

The task force was assigned by the state Legislature to study how to cover the estimated 9 percent of the state's population — or about 120,000 people — who are uninsured. Along with a single-payer system, the task force is also considering more targeted approaches that would provide basic health coverage to the uninsured without dismantling the existing market-driven healthcare system.

Under a single-payer system, the state would take control over healthcare, theoretically shutting out private insurers such as the Hawaii Medical Service Association or Kaiser Permanente. The state would offer a single benefits plan through contracts with healthcare providers.

The United States has consistently rejected the single-payer model, which has been derided by opponents as "socialized medicine" that would give consumers fewer choices and less quality.

State Rep. Josh Green, D-6th (Kailua, Keauhou), a Big Island doctor who serves on the task force, said he wants to give people information about a single-payer system so they can help choose whether it makes any sense for the state or whether there are better options to cover the uninsured.

An informational briefing on the consultant's report will be held tomorrow afternoon before the state House and Senate health committees.

"That's going to be what it boils down to. We're going to ask the people," Green said.

State House Minority Leader Lynn Finnegan, R-32nd ('Aliamanu, Airport, Mapunapuna), who also serves on the task force, questioned whether companies and workers would want to pay more for what she called "socialized healthcare."

"I would hope that if we do something it is steered more to the uninsured than to something that would turn the system upside down," Finnegan said.

The consultant, John Sheils of The Lewin Group in Virginia, told the task force that there are a lot of uncertainties involving healthcare costs and that the model was an estimate of a single-payer system in Hawai'i.

The new system would cover about 75 percent of the population, leaving out people on Medicare — the federal health insurance program for the elderly — and people under military or federal health plans. The benefits plan would be comparable to what is offered to workers under the state's Prepaid Health Care Act.

The consultant estimated that private employers would have to spend $25 million more in health costs — or about $49 for every worker — although small businesses would have to pay proportionally higher costs.

Families earning less than $150,000 a year would pay lower health costs, mostly because reduced premiums and out-of-pocket expenses would offset the new payroll tax on all but higher-income families.

But the consultant cautioned that the single-payer model would not keep up with rising healthcare costs over time, which could force the state to either adjust or reduce benefits or raise the payroll tax to up to 6.8 percent.

Healthcare providers would be reimbursed from the state based on existing Medicare rates for Hawai'i, which could also pose problems since providers already complain the rates are too low to meet costs.

John Radcliffe, a lobbyist and the associate executive director of the University of Hawai'i Professional Assembly, said providers would need incentives to support a single-payer system. "For this to succeed, there has to be something in it for the providers," said Radcliffe, who serves on the task force.

More than half of people statewide receive health insurance through work under the Prepaid Health Care Act, which requires companies to offer insurance to people who work more than 20 hours a week.

Short of a single-payer system, the task force is studying how to cover more part-time workers and others who lack insurance. The Legislature, after an earlier task force recommendation, is close to providing a basic health plan for children who are not being covered under private insurance or the state's insurance program for the poor.

Other recommendations might include more consumer-driven health savings accounts or expanding primary and dental care for uninsured adults through community health centers.

J.P. Schmidt, the state's insurance commissioner, who serves on the task force, said these suggestions would be more targeted than converting to a single-payer model. But he said the consultant's report is useful for a more informed debate.

"It gives us some good numbers to see what is necessary to implement a single-payer program," Schmidt said.

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.