Understanding the Micronesian Health Care Crisis in Hawaii State


Posted By: Universe Yamase

PUBA Case Study

November 15, 2011

This document was provided by a class exercise on November 15, 2011. It was an exercise to understand the Micronesian health care situation affecting the Compact of Free Association (COFA) Migrants, which are Palauans, Marshallese, Chuukese, Pohnpeians, Kosraens, and Yapese.

For those who do not understand the ongoing issue happening in Hawaii, this reading will be of much help.

Proposing Changes to Medicaid in Hawai‘i:


The Department of Human Services is responsible for administering the Medicaid program in Hawai‘i. Hawai‘i provides health insurance through managed care plans (eg. HMSA, Kaiser and Aloha Care) for eligible lower income Hawai‘i residents. The Medicaid Program in Hawai‘i is called QUEST. (Q)uality care, (U)niversal Access, (E)fficient Utilization, (S)tabilizing Costs and (T)ransforming the way health care is provided to QUEST members. Currently QUEST programs cover about 20% of Hawai‘i residents, 267,000. Children are eligible if they live in families who earn up to 300% of the federal poverty line. Adults are eligible if they earn less than 133% of the federal poverty line and have less than $5,000 in assets. For persons who are aged, blind and disabled until recently, there was a separate fee-for-service program. However now they have been enrolled into QUEST managed care plans like other low-income residents and there is a managed care program called QUEST Expanded Access, for those needing long-term care.

Who is Eligible?

In order to receive QUEST benefits, you must be a Hawai‘i resident; meet citizenship status requirements; have a social security number; and meet the income and asset requirements of the program. After determining eligibility, each eligible person will choose one medical plan for him or her and one for the family members. If a person does not choose a plan, he or she will be auto-assigned to a medical plan.

The Coverage:

QUEST covers all medically necessary inpatient, outpatient, prevention services, emergency services, pregnancy and maternity care, labs, xrays, prescription drugs, eye exams and behavioral health services. There are no charges for these services.

The Costs:

The state spent $606 million in FY 2011 and expects to spend $785 in FY2012. These costs were due primarily to the increase in the number of eligible persons applying for QUEST. The federal match was about 65% but it will fall to 50% this year. Thus the reduction in federal dollars and the increase in eligible person puts the DHS in a position that it must take significant cuts in the program’s funding.  The federal % with increase  again when the Affordable Health Care Act goes into effect (if it does) in 2014. 

The Case:

In July, 2010, due to budget restraints across the state, the Department of Human Services needed to reduce its budget by  $42 million.  It chose to design a new health insurance plan for roughly 7,500 Micronesians living in Hawai‘i as legal residents and were enrolled in QUEST medical plans. This limited plan would save the state about $15 million in state dollars (approximately 50% of the costs of Medicaid are covered by the federal government, and the federal Stimulus Act had increased the federal share to about 65%... but that was ending.

The new plan was established to cover legal aliens who have lived in the US for less than five years. The plans also covered Hawai‘i residents from Pacific nations that have entered treaties that granted them the same privileges given to the US residents, including health care.  The DHS initially tried to cut benefits to the COFA residents completely, and provide them no health insurance benefits, but lawyers quickly established a class action suit and won an emergency injunction, first on procedural grounds that the state had made program changes without giving the public adequate notices (which is required by the state administrative rules law) and then a federal judge also temporarily enjoined the department’s attempt to deny or adjust benefits to this group. The lawyers charged that the state’s new insurance program treats Hawai‘i residents who “hail from these Pacific nations differently from other low income residents which is a violation of the U.S. Constitution’s equal protection amendment. “

The New Health Insurance Plan:

The Department designed a plan called Basic Health Hawai‘i that would transfer non-citizens with less than five years’ residency on Sept 1st, 2009 from the comprehensive health plans of Medicaid and QUEST to a limited coverage plan. (Pregnant women and children were excluded).  The plan’s limited benefits did not cover life sustaining dialysis or chemotherapy for cancer patients.  It was estimated that approximately 7,500 Pacific Islanders would be affected by the plan (100 currently on dialysis and 150 cancer patients receiving chemotherapy).  The plan limited outpatient visits to 12 per year; (6 of these could be mental health visits) with an additional 6 mental health visits possible; 10 inpatient hospital days per year; 10 inpatient physician visits per year; 4 prescriptions per month and emergency room visits. These Hawai‘i residents had been receiving federally funded Medicaid benefits until 1996, when Congress made them ineligible in as a part of PWORA, the welfare reform law. Hawai‘i receives about $11 million a year to cover the costs of education, housing and health care for these migrants, but the actual costs are estimated to be about $100 million a year (but no audit has been done).

The Legal Challenge:

Lawyers for Equal Justice, (LEJ) representing the Compact of Free Association (COFA) residents brought a class action arguing that the implementation of the Basic Health Hawai‘i program violated the COFA residents’ due process rights by failing to provide adequate notice to the residents and it violated their equal protection rights based on their status as COFA migrants.  The DHS had sent letters notifying these residents about the reduction in health care only 2 weeks before the scheduled implementation date and failed to divulge that the new program would not cover dialysis or chemotherapy.  The letter did not adequately explain the right to a fair hearing to contest the transfer or other options available to COFA residents.  Federal Magistrate Seabright determined that the COFS residents were likely to succeed on the merits of their due process claim and issued a Temporary Restraining Order restraining DHS from implementing the BHH program. The state conceded that it had not properly complied with Chapter 91 and said it would provide timely notice before any changes took place.

 The DHS held the required public hearing in January 2010 and announced its intention to implement the Basic Health Program in May, 2010. The LEJ believes the decision to selectively single out certain minority groups for disparate access to critical medical services in unconstitutional as it discriminates based on national origin in violation of the Equal Protection Clause of the 14th Amendment. In December 2010, federal Judge Seabright issued a preliminary injunction enjoining the state of Hawai‘i from implementing Basic Health Hawai‘i and required the DHS to restore all previously offered health services for Micronesians.  The state of Hawai‘i is now appealing this decision to the 9th circuit court. Amicus briefs were filed by NAACP, The Japanese American Citizens League, and Kokua Kalihi Valley Health Center. The case currently waits for a panel selection and a hearing before the 9th circuit panel.

Hawai‘i’s Defense:

 The state of Hawai‘i has no legal obligation to provide state funded health care to all the needy COFA residents. The state does not have the discretion to provide federal Medicaid benefits to aliens barred from participation by the Welfare Reform Act. Medicaid is a federal program, not a state program and federal law dictates that COFA residents are barred from Medicaid. The state is under no constitutional obligation to make up for or undo the federal government’s discrimination against COFA residents. It cannot be STATE discrimination when a state excludes COFA residents from federal Medicaid in accordance with federal law.  Hawai‘i has not discriminated against aliens in its program; it has simply not completely made up for the federal government’s discrimination.

The Legislature:

 Senator Suzanne Chun Oakland introduced a bill (SB 2934) “relating to Medicaid” to appropriate money for comprehensive QUEST coverage for Compact of Free Association who qualify for Medicaid.  The bill was referred to HMS/TIA and WAM. It passed HMS and TIA but did not receive a hearing at WAM. Testimony from the DHS opposed the bill and stated that the “Cadillac coverage” to cover the COFA migrants would require a new appropriation of approximately $7-10 million in state general funds. Director Koller argued that providing QUEST coverage for COFA as required in this bill, “can only be achieved through a reduction in services to Medicaid-eligible clients which also means a reduction in federal matching funds. LEJ presented testimony in support of this bill. No one else testified and no companion legislation was introduced in the House. The House and the Senate both did however pass several resolutions requesting that the Congress provide money to support Hawai‘i’s COFA resident.