STAND. COM. REP. NO. 367-00

                                 Honolulu, Hawaii
                                                   , 2000

                                 RE: H.B. No. 540
                                     H.D. 2




Honorable Calvin K.Y. Say
Speaker, House of Representatives
Twentieth State Legislature
Regular Session of 2000
State of Hawaii

Sir:

     Your Committee on Human Services and Housing, to which was
referred H.B. No. 540, H.D. 1, entitled: 

     "A BILL FOR AN ACT RELATING TO HUMAN SERVICES,"

begs leave to report as follows:

     The purpose of this bill, as received by your Committee, is
to appropriate funds to provide health insurance to immigrant
children who would qualify for benefits under the State's
Children's Health Insurance Program (S-CHIP) but who are
ineligible due to rules imposed by federal law.

     The Hawaii State Primary Care Association and Na Loio
Immigrant Rights and Public Interest Legal Center (Na Loio)
testified in support of this measure.  The Department of Human
Services (DHS) supported the intent of this measure.

     With the enactment of the Personal Responsibility and Work
Opportunity Reconciliation Act of 1996 (Welfare Reform Act),
Congress stripped away medical assistance and other benefits from
income qualified immigrants.  A citizen's right to access these
benefits, however, was untouched.

     Your Committee heard testimony by Na Loio that Hawaii's
treatment of immigrants, otherwise entitled to benefits except
for their legal status in the United States, is in clear
violation of the law.  Former Attorney General, Margery Bronster,
concluded in a January 6, 1997, report that it is doubtful Hawaii
will be able to formulate a compelling state interest to justify

 
 
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discrimination between citizens and aliens in the distribution of
welfare benefits.  Relying on a decision issued by the United
States Supreme Court, Attorney General Bronster concluded,
"Hawaii certainly cannot claim that it has a compelling interest
favoring its own citizens over aliens in the distribution of
limited resources such as welfare benefits."

     Additionally, in New York, legal immigrants challenged the
state law that limited their access to the state-funded Medicaid
program and prevailed.  In Aliessa v. Whalen, 694 N.Y.S. 2d 308
(1999), the New York court held that a state statute which
curtails or eliminates state Medicaid coverage under the Welfare
Reform Act violates federal and state guarantees of equal
protection.  In reaching its decision, the court noted that
fiscal concerns and the distribution of limited resources cannot
excuse otherwise invidious distinctions between state residents.

     Your Committee further finds that if the Legislature
appropriated additional funds to S-CHIP, DHS would be able to
amend the State's plan and enroll an additional 3,300 uninsured
children whose family's income does not exceed 300 percent of the
federal poverty level for Hawaii.  At 300 percent of the federal
poverty level for Hawaii, Hawaii would reach universal access for
all children.  Furthermore, it would afford the State the
opportunity to draw down additional federal funds.  The estimated
annual cost to support this expansion would be $3,600,000 in
total.  The State's 35 percent share would equal $1,260,000
million, while the federal government would contribute $2,340,000
million.  There is compelling economic arguments in favor of this
expansion.

     Your Committee believes that it has an opportunity to not
only increase the numbers of uninsured children receiving health
insurance, but to provide health insurance to all permanent legal
immigrant residents as well.

     After further consideration, your Committee has amended this
measure by deleting its substance and inserting language to:

     (1)  Use Tobacco Settlement Special Funds to cover all
          children under S-CHIP, up to 300 percent of the federal
          poverty level for Hawaii;

     (2)  Provide health insurance to all permanent legal
          immigrant residents; and

     (3)  Make technical, nonsubstantive amendments for purposes
          of clarity and style.


 
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     In doing so, all legal immigrants, including adults, would
be eligible for medical assistance.  While your Committee is
uncertain of the financial impacts, recent court decisions
demonstrate the urgent need for action.

     As affirmed by the record of votes of the members of your
Committee on Human Services and Housing that is attached to this
report, your Committee is in accord with the intent and purpose
of H.B. No. 540, H.D. 1, as amended herein, and recommends that
it pass Second Reading in the form attached hereto as H.B. No.
540, H.D. 2, and be referred to the Committee on Finance.

                                   Respectfully submitted on
                                   behalf of the members of the
                                   Committee on Human Services
                                   and Housing,



                                   ______________________________
                                   DENNIS A. ARAKAKI, Chair