NCPA - National Center for Policy Analysis


January 26, 2009

A 9 percent jump in enrollment is forcing Hawaii's state government to consider ways to increase funding for its taxpayer-funded health coverage program, says the Heartland Institute.  Officials from Hawaii's Department of Human Services say the enrollment spike in Med-Quest, the state's Medicaid managed care program, took place over a 14-month period and is expected to continue as the state's unemployment rate (4.2 percent) increases.

Considering the current economic downturn, including many large bankruptcies and layoffs announced over the past several months in Hawaii, researchers are not surprised to see a surge in participation.  Coupled with the abrupt end to the state's 7-month-old universal children's health insurance program, made necessary by higher-than-expected participation, it is no surprise to see Med-Quest participation increase.


  • Hawaii spent close to $600 million in taxpayer funds on the Med-Quest program in 2007 alone.
  • While that amount was supplemented by $339 million from federal taxpayers last year, as of October 1, 2008, the federal government has decreased its contribution to the program by 9 percent, from 56.5 to 55.1 cents per dollar spend by Hawaii.
  • Med-Quest officials say the reduction means the state will have to spend an additional $18 million of Hawaiian's tax money on the program.

However, experts say the Med-Quest program will continue to drain the state's resources if there is no reform.  In 1974, Hawaii was the first U.S. state to mandate "universal" coverage, and despite significant changes, it still hasn't achieved it.  People who fall through the cracks become dependent on the state.  Unfortunately, this merely shifts the costs of health care to taxpayers, amplifying the consequences of recession and unemployment.

The solution: health insurance that people can buy when they are employed and healthy, which they can keep when they fall ill and lose their jobs.  This requires reform of the federal and state tax codes, says Heartland.

Source: Aricka Flowers, "Hawaii Seeking More Money for Health Plan," Health Care News (Heartland Institute), January 2009.


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