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Editorial: Raise payments for Medicaid care

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Hawaii’s low payments to health care providers who serve low-income and disabled Medicaid recipients are a problem for the state. When combined with its high cost of living, the paltry payments are a major factor in the state’s troubling physician shortage.

This year, worthy efforts to reduce the burden on health care providers who serve Medicaid clients, and incentivize more providers to practice and stay in Hawaii, are making headway in the Legislature. They should be supported.

>> Senate Bill 397 is a key piece of legislation, advancing the state’s interest in providing access to health care for all residents. The bill would increase Medicaid payments to health care providers to match current rates paid under Medicare, the government health insurance program for seniors.

On Tuesday, the House committees on Human Services and on Health and Homelessness both recommended the bill — amended to eliminate a spending target and to take effect in 2050 — be passed.

The full Legislature must now act to authorize $30 million in state spending proposed for SB 397, and to put this law in effect as soon as possible.

While SB 397 would make Hawaii first in the nation to increase Medicaid payments across the board in this fashion, this bold action is justified by Hawaii’s uniquely burdensome statewide cost of living and high proportion of low-income residents who now struggle to obtain adequate health care, especially in rural areas and on neighbor islands.

In Hawaii, Medicaid reimburses providers for most services at 62% of rates for Medicare, the Kaiser Family Foundation reports. This low reimbursement rate causes doctors to limit the number of patients treated, or avoid treating them entirely.

Hawaii’s low Medicaid payments to providers also deter doctors from coming to or staying in the state, according to testimony supporting SB 397 by representatives of the University of Hawaii and its John A. Burns School of Medicine.

Hawaii is facing a shortage of nearly 800 physicians statewide. On Hawaii and Maui islands, there are 40% fewer doctors than there should be for the population. At the same time, Hawaii’s Medicaid insurance program for low-income families and individuals, Med-QUEST, is a lifeline that ballooned during the pandemic. A stunningly dire fact: It currently covers about 33% of the state’s residents — more than 465,000 people, including more than half of this state’s children.

Bringing more doctors to Hawaii and adding to the numbers of physicians who will treat Medicaid patients is a platform priority for Gov. Josh Green, and should also be a legislative priority.

While Hawaii already reimburses some primary- care serv­ices for Medicaid patients at Medicare rates, aligning the rates broadly could push out an estimated $73 million more a year in state and federal funds in Medicaid reimbursements — with $30 million from the state leveraging an additional $43 million in matching funds from the federal Medicaid program. All of it would circulate throughout Hawaii’s economy, benefiting the state overall.

>> SB 1035, to waive general excise taxes on health care paid for by Medicaid, Medicare or military TRICARE at a for-profit hospital, clinic, health care facility, practitioner’s office or pharmacy, with a sunset of Jan. 1, 2026, may also be worthy of consideration. Though waiving taxes temporarily is not usually a preferred solution, Hawaii is one of only two states that taxes medical services, so further study of the tax’s effects is warranted.

If this bill is approved, it should be enacted with its sunset provision to examine whether a two-year tax holiday for health-care providers and pharmacies who accept Medicaid, Medicare or military TRICARE does indeed attract more providers to serve these clients in Hawaii.

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