Hawaii Is No Paradise if You Need Medical Care

High taxes contribute to a shortage of doctors while certificate-of-need laws crimp capacity

By Keli‘i Akina. Mr. Akina is president and CEO of the Grassroot Institute of Hawaii. Excerpts:

"Hawaii has among the fewest hospital beds per capita of any state and the 10th longest emergency-room wait times. For years it has wrestled with a severe doctor shortage and a lack of specialty care in its rural areas. These shortages are the result of decades of high taxes, voluminous regulations and certificate-of-need laws.  

Certificate-of-need laws require any investors wishing to build a new medical facility to prove there is a “need” for it. In Hawaii, existing medical facilities are given the chance to argue against any potential new kid on the block. This is like letting Burger King testify on whether the community needs a new McDonald’s. Not surprisingly, existing service providers generally oppose the construction of new facilities.

Since 2006, Hawaii officials have denied 24 certificate-of-need petitions, representing $200 million in private healthcare investment. The denied applications include three medical facilities that would have added 206 beds, increasing hospital capacity by 8%. According to the Mercatus Center, Hawaii would have 14 additional healthcare facilities and $219 less annual per capita healthcare spending if not for its certificate-of-need requirements."

"Hawaii’s requirements are among the strictest, covering everything from hospital expansions to substance-abuse centers and home healthcare.

"Even before the pandemic began, experts estimated the state needed 800 additional doctors and about 2,200 nonphysician healthcare personnel. Hawaii is a high-tax state, making it difficult to attract talented physicians from the mainland."

"A pyramiding general excise tax adds thousands of dollars to the average doctor’s medical-practice expenses. This tax is especially a problem for private-practice physicians. Under federal law, they can’t pass its costs on to Medicaid or Medicare patients, and have to pay it out of their own pockets."