Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2003

State of Hawaii

Sir:

Your Committee on Human Services, to which was referred S.B. No. 1579 entitled:

begs leave to report as follows:

The purpose of this measure is to ensure that the State of Hawaii's contribution to the Medicaid program is not decreased as a result of an increase in the federal medical assistance percentage.

Testimony in support of this measure was submitted by the Healthcare Association of Hawaii and the Long-Term Care Association of Hawaii. Testimony in opposition to this measure was submitted by the Department of Human Services.

Your Committee finds that Medicaid is a jointly funded, federal and state program that provides health care and long-term care to low-income patients. The federal government matches state spending for the services Medicaid covers. The federal matching rate, known as the federal medical assistance percentage, or FMAP, varies by state based on per capita income and currently ranges from 50% to 77%.

Your Committee further finds that Medicaid payments to health care providers currently do not cover the actual costs of providing care, despite increases in the FMAP from 50% to 58.77%, resulting in about $55 million more in federal Medicaid funds for Hawaii each year. This is in part because, at the same time that the FMAP has increased, the State has reduced the level of its funding for the Medicaid program, so that total Medicaid funding has remained relatively unchanged.

Accordingly, your Committee amended this measure to require that the level of State funding be maintained when federal funding, in the form of the federal medical assistance percentage, is increased. It is the intent of this Committee that the Department of Human Services consider using all or a portion of the additional federal moneys received to increase Medicaid reimbursement payments to health care providers to a level that more closely approaches the actual cost of providing care.

As affirmed by the record of votes of the members of your Committee on Human Services that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 1579, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 1579, S.D. 1, and be referred to the Committee on Ways and Means.