State legislators and the Hawaii Medical Service Association are astounded by a Lingle administration decision to stop funding the Keiki Care Program, heralded as providing universal health coverage for all island children.

“;We're just kind of shocked, really, that they made this sudden and precipitous decision,”; said Cliff Cisco, HMSA senior vice president.

HMSA joined with the state as a partner for the three-year pilot program, which began coverage April 1. The Legislature worked with the administration, health advocates and HMSA to draft the legislation in 2007.

“;This is another blow to folks already struggling,”; said Sen. Suzanne Chun Oakland (D, Sand Island-Kalihi-Liliha-Nuuanu-Pauoa-Puunui), one of the key figures in the passage of the legislation. She said the Legislature was “;quite proud”; of the public-private collaboration to insure all children. Hawaii was only the second state in the country, after Illinois, to have such a program.

The Department of Human Services, headed by Lillian Koller, issued a news release Wednesday announcing it would not fund the Keiki Care Program after Nov. 1, but would continue other parts of the pilot project.

  Chun Oakland, chairwoman of the Senate Human Services and Housing Committee, said Kenneth Fink, new DHS Med-QUEST Division administrator, told her a decision was made at the governor's level not to release funding for the keiki plan.

The department has been funding the coverage with other sources of money since April, Chun Oakland said, “;and when given notice by the Governor's Office that it was not intending to release the money, they stopped funding the program as of yesterday (Wednesday).”;

She said Fink received notice Wednesday that the money was not being released, and he faxed a letter to Cisco and followed it up with a phone call. Fink left her a message, but she was at a children and youth summit and did not learn of the action until yesterday from a reporter, she said.

Cisco said he was notified at about the same time that the news release went out. “;I hope the state would continue its commitment to the program,”; he said. “;The main thing is our commitment to the families who have children enrolled in it.”;

HMSA will continue the program through the end of the year even if the state stops its funding because families must be notified of the change, and there is not time between now and Nov. 1, he said.

When the program began in April, HMSA said the goal was to help as many as 3,500 children who do not have health insurance and do not qualify for Medicaid because their family income is too high — a so-called “;gap group.”;

  About 2,000 children are enrolled in the Keiki Care plan, and an estimated 85 percent were covered previously by the HMSA Children's Plan, which parents can purchase for $55 per month if their children do not qualify for Medicaid, DHS said.

“;We're hoping HMSA will keep the Keiki Care program on its own without involving the state,”; said DHS spokeswoman Toni Schwartz, suggesting HMSA charge parents the $25.50 premium per month per child that the state has been paying.

Among reasons cited by the DHS for pulling out of the partnership with HMSA is increased enrollment of children in Medicaid programs — totaling about 108,000 — and what it says is “;limited success”; of the plan to cover gap-group children. Also, the DHS said, there are no federal matching funds for the Keiki Care Plan, which costs the state about $50,000 a month.

The DHS is contacting families in the Keiki Care Plan and encouraging them to apply for free, comprehensive Medicaid coverage for their children. New eligibility guidelines allow families with incomes up to 300 percent of the federal poverty level to qualify for coverage, such as a four-member family earning more than $73,000 annually.

Chun Oakland and Rep. Josh Green (D, North Kona-Keauhou-Kailua-Kona-Honokohau), House Health Committee chairman, said the administration should have discussed its decision with the Legislature since the program was established by law.

  “;We're all a team here in Hawaii. It's not proper to make unilateral decisions,”; Green said. “;As long as they can cover every child, it doesn't make a difference, but if they come up one child short, they had better keep working with us for Keiki Care.”;

House Speaker Calvin Say (D, St. Louis Heights-Palolo Valley-Maunalani Heights-Wilhelmina Rise-Kaimuki) said termination of state funding for the Keiki Care Program “;was very draconian on the part of the (Human Services) department.”;

HMSA still has a children's program to insure kids who did not qualify for the Keiki Care Program or Medicaid, Cisco noted. “;We're looking to see what we can do. It happened so quickly, it caught us off guard.”;