[Congressional Record Volume 144, Number 2 (Wednesday, January 28, 1998)]
[Extensions of Remarks]
[Page E42]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




THE HAWAII FEDERAL MEDICAL ASSISTANCE PERCENTAGE ADJUSTMENT ACT OF 1998

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                         HON. NEIL ABERCROMBIE

                               of hawaii

                    in the house of representatives

                      Wednesday, January 28, 1998

  Mr. ABERCROMBIE. Mr. Speaker, I rise today to introduce legislation 
to adjust the Federal medical assistance percentage [FMAP] rate for 
Hawaii to more fairly reflect the state's ability to bear its share of 
Medicaid payments. I am pleased that my colleague, Representative Patsy 
Mink, has joined me as a sponsor of this measure. I am also happy to 
join our Senate counterparts, Senator Daniel Akaka and Senator Daniel 
Inouye, in putting forth this legislation. In November 1997, a similar 
bill, S. 1376 was introduced by Senator Akaka.
  The Federal share of Medicaid payments for each state varies 
according to the state's ability to pay. Because per capita income is 
the determining factor for ability to pay, wealthier state bear a 
larger share of the cost of the program through lower FMAP rates. In 
Hawaii, per capita income is relatively high. Thus, the State's FMAP 
rate is 50 percent, the lowest level. Under this bill, Hawaii's FMAP 
rate would be increased from 50 percent to 59.8 percent.
  The rationale for the FMAP rate change is quite simple. Hawaii's high 
cost of living skews the per capita income determining factor. Based on 
1995 United States Census data, the cost of living in Honolulu is 83 
percent higher than the average of the metropolitan areas. More 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 United States. 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 programs include 
Medicare prospective payment rates, food stamp allocations, school 
lunch programs, housing insurance limits, Federal employee salaries, 
and military living expenses. These examples show a Federal 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 gaging Hawaii's ability to 
support its health care programs.
  An excellent analysis of this issue is included in the twenty-first 
edition of ``The Federal Budget and the States,'' a joint study 
conducted by the Taubman Center and Local Government at Harvard 
University's John F. Kennedy School of Government and the office of 
Senator Daniel Patrick Moynihan. According to the study, if per capita 
income is measured in real terms, the State of Hawaii ranks 47th at 
$19,755 compared to the national average of $24,231. Thus, Hawaii's 50 
percent FMAP rate is understated because cost of living factors are not 
considered. Per capita income is a poor measure of Hawaii's relative 
ability to bear the cost of Medicaid services.
  In addition to 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. 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 our 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 and 60 percent. The other six states have FMAP rates of 65 
percent and higher. Even more revealing is that of the top 10 states 
with the lowest real per capita income, only Hawaii has a 50 percent 
FMAP rate.
  During consideration of the Balanced Budget Act of 1997, 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.
  I hope to make my colleagues in the House of Representative 
colleagues cognizant of the need for this legislation and to earn their 
support for its passage in the 105th Congress.

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