[Congressional Record Volume 143, Number 153 (Wednesday, November 5, 1997)]
[Senate]
[Pages S11771-S11772]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. AKAKA (for himself and Mr. Inouye):
  S. 1376. A bill to increase the Federal medical assistance percentage 
for Hawaii to 59.8 percent; to the Committee on Finance.


the hawaii federal medical assistance percentage adjustment act of 1997

  Mr. AKAKA. Mr. President, I rise today to introduce legislation to 
adjust the Federal medical assistance percentage [FMAP] rate for Hawaii 
to reflect more fairly the State's ability to bear its share of 
Medicaid payments. I am pleased that my colleague, the senior Senator 
from Hawaii, Senator Inouye, has joined me as a sponsor of this 
measure.

  The Federal share of Medicaid payments varies depending on each 
State's ability to pay--wealthier States bear a larger share of the 
cost of the program, and thus have lower FMAP rates. Per capita income 
is used as the measure of State wealth. Because per capita income in 
Hawaii is quite high, the State's FMAP rate is at the lowest level--50 
percent. Hawaii is one of only a dozen States whose FMAP rate is at the 
50 percent level. My bill would increase Hawaii's FMAP rate from 50 
percent to 59.8 percent.
  Because of our geographic location and other factors, the cost of 
living in Hawaii greatly exceeds the cost of living in the mainland 
States. Per capita income is a poor measure of a State's relative 
ability to bear the cost of Medicaid services. An excellent analysis of 
this issue is included in the 21st edition of ``The Federal Budget and 
the States'', a joint study conducted by the Taubman Center for State 
and local Government at Harvard University's John F. Kennedy School of 
Government and the office of U.S. Senator Daniel Patrick Moynihan. 
According to the study, if per capita income is measured in real terms, 
Hawaii ranks 47th at $19,755 compared to the national average of 
$24,231. This sheds a totally different light on the State's financial 
status.
  The cost of living in Honolulu is 83 percent higher than the average 
of the metropolitan areas tracked by the U.S. Census Bureau, based on 
1995 data. Recent studies have shown that for the State as a whole, the 
cost of living is more than one-third higher than the rest of the U.S. 
In fact, Hawaii's Cost of Living Index ranks it as the highest in the 
country. Some government programs take the high cost of living in 
Hawaii into account and funding is adjusted accordingly. These include 
Medicare prospective payment rates, food stamp allocations, school 
lunch programs, housing insurance limits, and military living expenses.
  These examples reflect the recognition that the higher cost of living 
in noncontiguous States should be taken into account in fashioning 
government program policies. It is time for similar recognition of this 
factor in gauging Hawaii's ability to support its health care 
programs. During consideration of the Balanced Budget Act this past 
summer, the Senate included a provision increasing Alaska's FMAP rate 
to 59.8 percent for the next 3 years. Setting a higher match rate as 
was done for Alaska would still leave Hawaii with a lower FMAP rate 
than a majority of the States, but would better recognize Hawaii's 
ability to pay its fair share of the costs of the Medicaid program.

  Despite the high cost of living, the Harvard-Moynihan study finds 
that Hawaii also has one of the highest poverty rates in the Nation. 
The State's 16.9 percent poverty rate is ranked eighth in the country, 
compared to the national average of 14.7 percent. These higher cost 
levels are reflected in State government expenditures and State 
taxation. Thus, on a per capita basis State revenue and expenditures 
are far higher in Hawaii, as well as Alaska, than in the 48 mainland 
States. The higher expenditure levels are necessary to assure an 
adequate level of public services which are more costly to provide in 
these States.
  Of the top 10 States with the highest poverty rates in the country, 
the Harvard-Moynihan study finds that only 3 others have an FMAP rate 
between 50-60 percent. The other six States have FMAP rates of 65 
percent and higher. Even more astonishing is that of the top 10 States 
with the lowest real per capita income, only Hawaii has a 50-percent 
FMAP rate.
  To bring equity to this situation, Hawaii has sought an increase in 
its FMAP rate over the past several years. Just as we did for Alaska 
this past summer, Hawaii should be included in this long-warranted 
change, as the same factors justifying an increase for Alaska apply to 
Hawaii. Recognition of this point was made by House and Senate 
conferees to the Balanced Budget Act. The conferees, on page 879 of the 
conference report, note that poverty guidelines for Alaska and Hawaii 
are different than those for the rest of the Nation, yet there is no 
variation from the national calculation in the FMAP. The conferees 
correctly noted that comparable adjustments are generally made for 
Alaska and Hawaii.
  The case for an FMAP increase is especially compelling in Hawaii, 
which has a proud history of providing essential health services in an 
innovative and cost-effective manner. That commitment is not easy to 
fulfill. Unlike most States, for example, Hawaii's Aid to Families with 
Dependent Children/ Temporary Assistance for Needy Families [AFDC/TANF] 
caseloads have been increasing dramatically. In Hawaii, our caseload 
has risen by 21 percent since 1994 compared to a national decline of 23 
percent during this same period. Since TANF block grants are based on

[[Page S11772]]

historical spending levels, the increased demand has placed extreme 
pressure on State resources.

  Hawaii has sought to maintain a social safety net while striving for 
more efficient delivery of government services. The most striking 
example is the QUEST Medical Assistance Program, which operates under a 
Federal waiver. QUEST has brought managed care and broader coverage to 
the State's otherwise uninsured populations. At the same time, Hawaii 
is the only State whose employers guarantee health care coverage to 
every full-time employee, a further example of Hawaii's commitment to a 
strong social support system.
  There is a particularly strong need for a more suitable FMAP rate for 
Hawaii now. The State has not participated in the economic growth that 
has benefitted most of the rest of the Nation. Hawaii's unemployment 
rate is above the national average and State tax revenues have fallen 
short of projected estimates. The need to fund 50 percent of the cost 
of the Medicaid program puts an increasing strain on the State's 
resources.
  For all of these reasons, the FMAP rates for Hawaii should be 
adjusted to reflect more equitably the State's ability to support the 
Medicaid program. This will assure that the special problem of the 
noncontiguous States is dealt with in a principled manner. I believe it 
is also important to point out that based on Hawaii's current Medicaid 
spending level of approximately $700 million, each percentage point 
increase in our FMAP rate would provide approximately $7 million 
annually in additional Federal funds. Thus, the cost of enhancing the 
State's FMAP rate would be relatively modest.
  I urge my colleagues in the Senate to support an upward adjustment in 
Hawaii's Federal medical assistance percentage.
  Mr. President, in closing, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1376

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. INCREASED FMAP FOR HAWAII.

       (a) Increased FMAP.--The first sentence of section 1905(b) 
     of the Social Security Act (42 U.S.C. 1396d(b)), as amended 
     by section 4725 of the Balanced Budget Act of 1997 (Public 
     Law 105-33; 111 Stat. 418), is amended--
       (1) by striking ``and (3)'' and inserting ``, (3)''; and
       (2) by inserting before the period at the end the 
     following: ``, and (4) for purposes of this title and title 
     XXI, the Federal medical assistance percentage for Hawaii 
     shall be 59.8 percent''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall apply to--
       (1) items and services furnished on or after October 1, 
     1997, under--
       (A) a State plan or under a waiver of such plan under title 
     XIX; and
       (B) a State child health plan under title XXI of such Act;
       (2) payments made on a capitation or other risk-basis for 
     coverage occurring under plans under such titles on or after 
     such date; and
       (3) payments attributable to DSH allotments for Hawaii 
     determined under section 1923(f) of such Act (42 U.S.C. 
     1396r-4(f)) for fiscal years beginning with fiscal year 1998.
                                 ______