Hawaii divided on health care law


POSTED: Wednesday, March 24, 2010

The reviews are mixed.

State Human Services Director Lillian Koller lists a dozen reasons why the health care reform bill is bad for Hawaii, while advocates for seniors, some health care insurers and medical officials cite numerous benefits.

The historic bill signed into law yesterday is a massive, complicated document with many details to be worked out, holes to be plugged and some issues likely headed to court. Republican Gov. Linda Lingle and Attorney General Mark Bennett are considering joining one or more potential lawsuits.

“;Hawaii is definitely in a unique situation because a lot of what's contained in federal law we've already implemented and had in effect many, many years, so we're way ahead of the curve,”; said Jennifer Diesman, vice president of government relations at the Hawaii Medical Service Association.

Because of Hawaii's Prepaid Health Care Act, which mandates employers to provide employee health benefits that are defined by law, she said, “;We're starting from square 10, and the rest of the country might be starting from square one.”;

Koller says, however, the reforms “;would force Hawaii and all the other states into one-size-fits-all Medicaid programs that take away the flexibility to control health outcomes and costs.”;

She said the bill does not address medical tort reform, fraud and inefficiencies to control Medicaid and Medicare costs; neither does it address the “;unfair burden on Hawaii taxpayers”; created by the federal Compact of Free Association, which allows migrants from Micronesia, the Marshall Islands and Palau to live in Hawaii and receive health and other benefits.

The DHS says the reform bill would increase eligibility for the state's QUEST program from an income of up to 100 percent of federal poverty level (about $25,460 for a four-member family) to 133 percent (about $34,000). This imposes an unfunded federal mandate on Hawaii that will cost about $300 million over a five-year period, the DHS says.

Dr. Virginia Pressler, executive vice president and chief strategic officer at Hawaii Pacific Health, said she believes the new law's impact in Hawaii will be less than in a lot of other states because most islanders already have health insurance and the state has good Medicaid coverage. Hawaii Pacific Health includes Straub, Kapiolani and Wilcox hospitals.

Sole proprietors in Hawaii have had trouble getting insurance, and that would be remedied by the reform bill, Pressler said, explaining that in 2014 they will have access to health insurance exchanges and receive subsidies up to 400 percent of the federal poverty level.

A “;gap group”; of young adults ages 20 to 26 — “;one of the largest uninsured groups in the state”; — also would benefit with health coverage as dependents until age 26, Pressler said.

The Medicaid reimbursement rate for primary care physicians will go to 100 percent of Medicare rates in 2013, up from the 60 percent they are now getting. But the new law does not resolve a proposed 22 percent cut in Medicaid reimbursements for physicians that Congress has extended from January until the end of this month, Pressler pointed out.

The new law puts more focus on creating health care delivery systems and new ways of paying for care to emphasize quality of care at lower cost, Pressler said. “;Our hospitals in general have some of the better statistics nationally as far as quality, and we have a lower rate of inappropriate admissions and readmissions to hospitals within 30 days of discharge than national averages.”;

Hawaii and Tennessee would receive permanent federal funding — Disproportionate Share Hospital payments of $10 million a year — to help defray the cost of “;charity care”; to uninsured and underinsured patients.

Republican U.S. Sen. John McCain is seeking to repeal the provision as a “;sweetheart deal.”;

Pressler said a downside of the bill is that individuals who make more than $200,000 or a family earning $250,000 are going to pay higher taxes, “;but it's a benefit for most people.”;

Hawaii's 193,000 Medicare beneficiaries with Part D drug coverage will benefit immediately if they fall into a coverage gap known as the “;doughnut hole.”; They will receive a $250 rebate this year, said AARP spokesman Bruce Bottorff, and a 50 percent discount on brand-name drugs starting next year if they reach the gap. The hole would be closed in 10 years under the reconciliation or “;fixer”; bill pending Senate passage, he said.

Guaranteed Medicare benefits are protected for beneficiaries, Bottorff emphasized, citing these among other benefits for seniors:

» Employees 50 to 64 years old who lose their jobs in a tough economy would be able to go into an exchange and shop for affordable health care coverage instead “;being at the mercy of health insurance companies.”;

» A Community Living Assistance Services and Support (CLASS) Program will establish a voluntary employee savings program where younger workers can put aside some income for future long-term care needs.

» Federal spending is increased for states to expand home and community-based services, similar to Hawaii's Kupuna Care.

Both HMSA and Kaiser Permanente said they expect the reforms to improve the health care system and American lives.

Diesman said Hawaii's Prepaid Health Care Act is “;very clearly preserved in the language,”; adding, “;What isn't clear is how the prepaid law will work in conjunction with the federal law in terms of issues outside the scope of our state law.”;

She said subsidies small-business employers might be eligible for to offset the cost of their health care premiums “;literally would translate into a boon for Hawaii's health care employers. Now they might get a break from the federal government for doing what they have been doing.”;

But she questions how that provision will work if employers have to buy coverage through an exchange to obtain subsidies. “;Can they do that if there is no benefit package as rich as the prepaid benefit package? HMSA is committed to offering plans that will meet federal requirements so employers can avail themselves of subsidies.”;

She said the reform bill is “;a real win for part-time employees in Hawaii.”; In 2014 they will be required to purchase health coverage, but they will get subsidies to do so, she said.

Health plans are going to be taxed — a concern for HMSA, which is a nonprofit and not currently subject to taxes at the state level, she said. “;Like any big law, we don't really know how it's going to work out.”;

Kaiser wants the annual insurer tax and Medicare Advantage rate changes to be re-examined in a “;partnership and dialogue with policymakers.”;