An amendment successfully offered by U.S. Senator Daniel K. Akaka (D-Hawaii) to S. 1, the Prescription Drug and Medicare Improvement Act of 2003, which passed the Senate today by a 76 to 21 vote, would restore a Medicaid disproportionate share hospital (DSH) allotment for Hawaii. Medicaid DSH payments are designed to provide additional support to hospitals that treat large numbers of Medicaid and uninsured patients. DSH allocations are based on state Medicaid spending totals and require a state matching share. According to estimates, Hawaii could receive approximately $19 million in FY 2004 and $19 million in FY 2005.
DSH allotments for each state are based on their actual DSH expenditures for fiscal year 1995. Legislation in 2000 established a floor for DSH payments. In 1994, the State of Hawaii implemented the QUEST demonstration program that was designed to reduce the number of uninsured and improve access to health care. Hawaii's prior Medicaid DSH program was incorporated into QUEST. As a result of the demonstration program, Hawaii did not have DSH expenditures in 1995 and was not provided a DSH allotment. Without Senator Akaka's amendment, Hawaii would have to terminate QUEST to receive an annual DSH allotment.
The Akaka amendment provides a DSH allotment to Hawaii and allows the state to participate in the Medicaid DSH program without abandoning QUEST. "This amendment is necessary because many of our hospitals in Hawaii are struggling to meet the elevated demands placed upon them by the increasing number of uninsured people," Akaka said. "DSH payments will help Hawaii hospitals meet the rising health care needs of our communities and reinforce our health care safety net. QUEST has not eliminated the uninsured in Hawaii. All 50 states need to have access to Medicaid DSH support and many states with similar demonstration programs receive DSH allotments."
Despite serious reservations, Senator Akaka voted for the Prescription Drug and Medicare Improvement Act. "For far too long Medicare has lacked a prescription drug benefit," Akaka noted. "The lack of this benefit has been the gaping hole in the Medicare safety net. Prescription drugs are the largest out-of-pocket health care cost for seniors. Many who cannot afford drug coverage often do not fill their prescriptions, break the drugs in half, or skip doses.
"This legislation is an important step forward in meeting the prescription drug needs of seniors. However, I am particularly concerned that the bill provides insufficient prescription drug coverage for seniors and depends excessively on private plans."
Senator Akaka expressed concern with the gap in prescription drug coverage after drug expenditures reach $4,500 and the reliance on private insurers included in the legislation. Medicare beneficiaries will not receive any benefits until their total drug expenditures reach at least $5,813 unless they qualify for the additional low-income support. This gap in coverage will occur while they are still paying premiums. "It is unfortunate that amendments designed to fill in the gap were defeated," Akaka said. "This issue must be revisited in the future. Also, the eligibility requirements for the additional low-income support are too restrictive and will deny many seniors in need the extra help that they need.
"The dependence on private insurers to provide this benefit presents additional challenges to providing seniors with access to prescription drugs. Prescription drug-only insurance policies are currently not offered and they will need to be developed. The utilization of private plans creates a system in which insurers have incentives to limit access to needed drugs. In addition, the premiums that seniors pay for coverage are likely to vary depending on what region people live in. It is not equitable for a federal benefit to have different prices across the country. Seniors should have the option of choosing a Medicare-administered plan instead of one that is run by a private insurer."
