This study provides an analysis of workers’ compensation (WC) system in Hawaii, including its goals, current operation, and recent trends on employer costs and employee benefits. Historical trends in employer cost and employee benefit levels are also compared between Hawaii and other states in the U.S. One of the key findings of the study is that total insurance premiums paid by employers continue to increase in Hawaii despite a sharp decline in total benefits paid to employees in recent years. The study recommends that a more detailed analysis be conducted to determine the reasons for this increasing gap between employer costs and employee benefits. Various WC cost containment practices that have been adopted in Hawaii and other states are also reviewed. The study also examines various legislative proposals, administrative rule changes, and new initiatives in recent years relating to Hawaii’s WC system in terms of their impacts on reducing employer costs and increasing employee benefits. Also included in the report is a brief discussion of the recent reforms to California’s WC system and their impacts on WC costs in that state. Finally, the report also suggests some possible areas of reforms to Hawaii’s WC program.