The Abercrombie administration announced Thursday that the state will not go through with benefit reductions for adults in QUEST, the state’s health plan for the poor, choosing to preserve patient access to a full range of medical services, including unlimited hospital stays.

The state will still tighten income eligibility for adults in QUEST starting in July, which means about 3,500 adults could lose health insurance coverage, but will cancel limits on hospital stays and the elimination of outpatient rehabilitation, optometry services and prosthetics. The administration had announced earlier last month that it would cancel the elimination of coverage for durable medical equipment, such as wheelchairs and oxygen tanks.

The income eligibility and benefit reductions had been planned to pare $150 million from the $1.8 billion health program, the state’s version of Medicaid. The state Department of Human Services said the state would look to save through an estimated decrease in patient actuarial costs for medical services and a continuation of lower reimbursement rates for health care providers.

"The cost of health care is one of the greatest challenges faced by island families, and the restoration of Medicaid coverage goes a long way in the preservation of access to the full range of medical services for Hawaii’s neediest and most vulnerable adults," Gov. Neil Abercrombie said in a statement.

Patricia McManaman, director of the Department of Human Services, has said over the past several weeks that the state would attempt to preserve the benefits. "Restoring these critical services is key to addressing the health care needs of QUEST beneficiaries," she said in a statement.

Abercrombie, like former Gov. Linda Lingle, had identified the need to contain costs in QUEST as essential to balance the state’s budget. Enrollment in QUEST — more than 280,000 people — has grown by 34 percent since the recession.

But Abercrombie’s advisers were sensitive about reducing health care benefits for the poor at a time when the economy is in recovery and the governor has touted the state’s improved financial management.

The state had initially wanted to limit inpatient hospital stays for adults in QUEST to 10 days a year — the lowest in the nation — a proposal that disappointed many in the social-service community. The state responded by setting the limit at 30 hospital days a year, an adjustment that satisfied many of the critics, and then canceled any limits Thursday.

"I’m glad to hear that," state Sen. Suzanne Chun Oakland (D, Kalihi-Pauoa), chairwoman of the Senate Human Services Committee, said of the state’s decision to cancel the benefit reductions. "But I know we’re going to have several thousand people that still won’t have insurance. I just met with the Hawaii Primary Care Association. We have to prepare for that because they still will need help."

While an estimated 3,500 adults could lose insurance coverage because of the income eligibility restrictions, more than 10,000 adults who are now in two limited QUEST plans will see their benefits increase because all adults will be moved into the main QUEST benefit package in July. The state has said that the benefit package, which includes unlimited outpatient doctor visits and prescription drugs, places an emphasis on primary and preventive care.

John McComas, chief executive officer of AlohaCare, which has about 80,000 people on QUEST, applauded the state for finding a way to preserve benefits for the adults who will remain covered. "The state has been very thoughtful and sincerely concerned about the welfare of its beneficiaries throughout this entire process, and clearly never gave up efforts to restore the benefits," he said in a statement.