Mr. President, I rise today to reintroduce legislation I authored during the 105th Congress that would 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.
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 on the mainland. Per capita income is a poor measure of a state's ability to bear the cost of Medicaid services. An excellent analysis of this issue appears 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 policies. It is time for similar recognition of this factor in gauging Hawaii's ability to support its health care programs. My colleagues may recall that the Balanced Budget Act of 1997 included a provision increasing Alaska's FMAP rate to 59.8 percent. Setting a higher match rate would still leave Hawaii with a lower FMAP rate than a majority of the states, but would more accurately reflect 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 eighth in the country, compared to the national average of 14.7 percent. These higher costs are reflected in state government expenditures and state taxation. Thus, on a per capita basis, state revenue and expenditures are far higher in Hawaii and 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 ten states with the highest poverty rates in the country, the Harvard-Moynihan study finds that only three 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 ten 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 in 1997, Hawaii deserves equitable treatment. This change is long warranted. 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 noted 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, Hawaii's Aid to Families with Dependent Children/Temporary Assistance for Needy Families (AFDC/TANF) caseloads have risen significantly in recent years. Since TANF block grants are based on 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 at this time. The state has not participated in the robust 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 urge my colleagues in the Senate to support an upward adjustment in Hawaii's Federal Medical Assistance Percentage.
Mr. President, in closing, I ask that the text of the bill be printed in the Record
