The alarming prospect of rationed care is revealing an underlying problem: As a result of government policy, Hawaii does not have enough acute care hospital beds.

In fact, Hawaii has among the fewest beds per capita of any state in the nation, according to the Kaiser Family Foundation. Nationwide, the U.S. average is 2.4 beds per 1,000 people, but Hawaii has only 1.9.

Only eight states have fewer beds per thousand people, according to the Kaiser foundation. Two of those with the lowest numbers, Idaho and Oregon, are similarly running out of intensive care beds, with government officials warning that it may be difficult to provide the same level of care as in more normal times.

All three states had prided themselves on cost reduction strategies that made health care operations more profitable in good times despite the reality that epidemics are a recurring and predictable part of the human condition — Spanish flu, bubonic plague, syphilis, respiratory viruses, among others.

For example, more than 2,200 people died of AIDS in Hawaii, mostly in the 1980s and 1990s, almost four times as many as have died from Covid-19 so far, with many of them requiring hospitalization.

Current health policy, here and across the nation, seems to have forgotten the past.

“We were very successful at caring for people outside hospitals,” said Larry Levitt, the Oakland-based health policy research director at the Kaiser Family Foundation. “It saved money but it left us very vulnerable in a pandemic. Our health care system is largely profit-driven and there was no money or incentive to provide excess capacity in case a pandemic hit.”

In recent decades, as Hawaii’s population grew, its number of beds actually fell. In 2004, for example, there were 2,047 acute care beds in Honolulu County, according to the Hawaii State Health Planning and Development Agency, but by 2019, the number had fallen to 1,910. In other words, while the island’s population grew, the state’s hospital capacity contracted.

This mirrored a national trend, now visible amid the Covid pandemic. In 1975, the United States had 1.5 million hospital beds, according to the Centers for Disease Control and Prevention. But by 2015, the number had fallen to fewer than 898,000. In other words, the country’s population climbed 48%, but the number of beds available for people who fell ill declined 40%.

The phenomenon was driven by federal and state health policy. Health industry executives and government officials cut the number of hospital beds to treat people at lower cost in alternative settings, arguing that technological advances reduced the need for lengthy convalescence, that new drugs promoted faster recovery and that patients preferred to avoid hospital stays and wanted to recover at home.

The federal government and private insurers changed the way they paid hospitals for medical services, giving them financial incentives to move people out of hospital beds more quickly. That, in turn, led to the perception that empty hospital beds were useless assets.

There was a parallel problem as well. The failure to adequately staff hospitals at times when there were only a few patients meant that hospitals didn’t have a deep bench of home-grown nurses and doctors to call on when needs grew high, as they are now.

In a sense, it was the just-in-time manufacturing philosophy brought to health care.

These patterns spread across the country but were adopted with greater enthusiasm in the western states, according to Levitt.

“The Pacific U.S. is where managed care got its start,” he said. “This is very much a Pacific phenomenon.”

In Hawaii, the consequences of those decisions are becoming clear. Last week, state hospital executives reported that the state’s 223 licensed intensive care beds were 100% occupied, half of them by Covid patients and half by people with other ailments.

On Monday, Hawaii Gov. David Ige signed an executive order that will give hospital administrators immunity from liability for actions that give preferential care to one group of patients over another. Under that order, “cancelling or postponing elective surgeries and procedures” will be permitted “as each facility determines to be appropriate under the circumstances presented by the COVID-19 emergency.”

Health care rationing — with people being denied care for worrisome ailments — is already occurring because many hospitals, including The Queen’s Medical Center, Straub Medical Center and Kaiser Permanente Hawaii, have told patients without Covid that they are limiting the kinds of care they can receive until the crisis passes. Even patients with breast cancer have been told they must wait for care until the Covid crisis eases.

In ordinary times the shortage was not a major problem. Hawaii has a healthy population and its high rate of health insurance — 96% — means that many people can afford to get preventive care that heads off more serious issues. In fact, Hawaii’s health system has long been a source of local pride.

But there were problems lurking under the surface.

“The surge in Covid and delta cases is not the cause of the shortage of health care capacity,” said Keli`i Akina, president and chief executive officer of the Grassroot Institute of Hawaii, a conservative think tank based in Honolulu. “It’s the stress test of our health care capacity.”

Officials at the state health department declined to comment.

In an emailed statement, Hilton Raethel, president of the Healthcare Association of Hawaii, the hospital industry trade group, said that Hawaii is the healthiest state in the nation and normally does not require so many hospital beds. Patients are regularly better served in non-hospital settings, he wrote in an email to Civil Beat.

He said that the hospital industry is adjusting to the changing conditions.

“During this once-in-a-century pandemic, Hawaii has been protecting — and adding — capacity through a number of means including offering monoclonal antibody treatments; providing surge staffing to expand ER capacity; delaying elective surgeries when appropriate; enforcing robust public health measures such as masking, limited gatherings, and social distancing; and mandating vaccinations in certain sectors.”

Pop-up field hospitals can provide additional hospital beds where necessary, he wrote.

Critics say that state health policy has been short-sighted in permitting further cutbacks, even now, in the face of rising need.

As recently as 2016, cash-strapped Wahiawa General Hospital, which has served as a hub for care in rural central Oahu since 1944, had 57 acute-care beds. In June, Hawaii’s State Health Planning and Development Agency gave Wahiawa permission to “delete” 21 medical/surgical beds and use the space for nursing home care and rehabilitation patients.

Wahiawa area residents had rallied in defense of the hospital and have watched as the hospital contracted.

“It took care of Wahiawa’s needs really well,” said Martha Peterson, president of the Wahiawa General Hospital Auxiliary and a member of the group since the 1960s. “We still need it. We really need it.”

In addition to failing to protect existing health resources, the state has made it hard for new entrants into the market. According to the Mercatus Center, a conservative think-tank at George Mason University in the Washington D.C. suburbs, Hawaii has more regulatory hurdles for new health care facilities than any other state, with 28 separate services subject to state limitations. These restrictions are called “Certificate of Need” laws, which are administered by the state health planning agency, which decides which projects can go forward and which it will block.

“The number of services where a certificate of need is needed is quite high, and the fees in Hawaii are quite high as well,” said Mathew D. Mitchell, senior research fellow at Mercatus, who did the state-to-state comparisons. “Big hospital systems like certificates of need. They don’t protect patients but it protects the bottom line.”

In 2006, as a result of a certificate of need review, the state agency rejected the application of a proposed 150-bed hospital in Kihei, Maui, on the grounds that it was not needed and would injure the island’s primary hospital, Maui Memorial Medical Center in Wailuku.

Joseph Pluta, a real estate broker who also serves as president of the West Maui Improvement Foundation, was a vocal supporter of the proposed Kihei hospital, and said the state’s decision to block its construction has cost lives on Maui.

“The biggest reason Hawaii doesn’t have enough beds is that certificate of need requirement,” Pluta said. “It’s a self-inflicted problem.”

In the past year, more than a dozen states have suspended their certificate of need requirements or enabled emergency provisions to speed building additional capacity, according to Mercatus. New Jersey and New York, which have the nation’s highest and third-highest Covid death rates, both waived state hospital-bed review requirements last year in response to the emergency.

Hawaii’s bed occupancy level, recently projected at about 79% by the American Hospital Association, places the state with a comparable crisis level to Texas, Alabama, South Carolina and Florida, states that have many more cases of Covid but more available hospital beds where patients can be treated.

In a telephone interview, Peter Sybinsky, a former state health department director in the 1990s and most recently president and chief executive officer of the Hawaii Health Information Corp., now retired, said that excess beds have been viewed in the state as “excess capacity.” Hospital beds were consequently taken out of service, he said.

“Surge capacity wasn’t on our radar,” he said. “We couldn’t prepare for what we didn’t expect.”

He said that it had been a long time since Hawaii had a pandemic, and no one really thought it would be necessary to provide the kind of surge capacity that Hawaii needs now. In any case, it would be very expensive to provide and maintain it, he said.

“It’s not solvable right now,” he said. “You’ve got to work with what you have and be creative with what you have.”