State legislators surprised hospital officials with a $12.3 million appropriation to help offset rising costs of health care for the unemployed and uninsured.

Because of the state's bad economy, the health-care industry did not expect any help this year from the Legislature, said Rich Meiers, Healthcare Association of Hawaii president and chief executive officer.

But lawmakers “;recognized the fact that we are the safety net,”; he said. “;All the people without jobs, where do they go first? To the emergency rooms.”;

If Gov. Linda Lingle approves the state funding, it will provide a match to secure $15 million in federal funds during the next fiscal year, Meiers said.

Dr. Kenneth Fink, Med-QUEST Division administrator in the Department of Human Services, said, “;The hospitals are a critical part of our safety net and provide an invaluable service to our clients, but at this time with limited state dollars, we need to make difficult choices and maximize federal funding.”;

Hospitals receive money through a Disproportionate Share Hospital Program to offset costs of providing charity and uncompensated care. Hawaii gave up the program in the 1990s when the QUEST health plan began, and has been one of only two states not participating, Meiers said.

Tennessee, the other state, has corrected the situation at the federal level, he said, “;and we're working with our delegation to try to restore DSH payments.”;

Hawaii private hospitals have been receiving DSH payments since 2007 through congressional appropriations, according to a Human Services Department spokesman.

They also receive $7.5 million in federal waiver payments annually that began in 2005 and will continue until at least 2013.

The public hospitals receive a separate annual supplement of $6.9 million.

The disproportionate share payments are a big help, spread out among all private and state hospitals, Meiers said, “;but this is just a drop in the bucket. Even if we add all the federal and state money together, it's about $27 million.”;

The association represents all hospitals and health care facilities in Hawaii. Last year they lost more than $150 million because of increasing charity care, bad debt and below-cost reimbursements.

The impact of job losses is beginning to be felt, Meiers said, pointing out insurers are seeing some clients drop out because they cannot afford insurance.

“;The proof is going to be in the pudding as we get further down the road. ... We expect charity and uncompensated care to go up greatly this year.”;