In Hawaii, more than 1 in every 3 children, and just fewer than 1 in 3 adults, are covered by Medicaid. In the state with the highest cost of living in the country, this affordable and efficient health care coverage can be a lifeline preventing families from choosing between paying for health care or rent and groceries.
However, the U.S. Congress’ current proposal to drastically cut funding for federal programs has put federal funding of Medicaid in doubt. Despite assurances to the contrary, the proposed federal spending cuts are almost certain to include decreasing Medicaid funding. Any decrease in federal funding to Medicaid could be devastating for Hawaii.
The federal government contributes over $2 billion annually to Medicaid in Hawaii, which is 53% of all federal funding sent to the state. The federal government pays about 73% of total Medicaid costs in Hawaii. If federal funding were reduced, Hawaii lawmakers would need to make up for it by increasing funding from the state, decreasing Medicaid benefits coverage, or decreasing reimbursement to providers — all of which would have negative impacts upon the physical and financial health of our state.
Decreasing the services covered by Medicaid would be cruel and unethical as this program specifically covers those most in need of assistance: children, elderly, those with chronic illness or disability, and those living in poverty. This would also further stoke financial inequality as those able to afford private insurance would still be able to access the benefits which would be cut from Medicaid. On moral and ethical grounds, decreasing services provided by Medicaid should not be seriously considered.
With so many people in the state struggling to make ends meet, and many competing issues requiring funding — like ongoing recovery from the Lahaina fires, updating aging infrastructure and investments toward improving cost-of-living — it is unlikely that the state Legislature will be able to find extra funds in its current budget to appropriate toward keeping Medicaid services at their current level. The idea of increasing taxes to help bolster Medicaid, without subsequent decreases in insurance premiums, is likely to be a political nonstarter.
This then leaves decreasing payments to providers as the likely way of balancing the budget after federal Medicaid cuts.
Medicaid already reimburses medical providers at a rate much lower than private insurance. These lower payment rates make it financially unviable for many providers to accept Medicaid, increasing difficulty for the most vulnerable of our population to access and receive medical care. Increasing frustration with poor medical insurance reimbursement, among other administrative burdens, may drive providers to leave the state altogether, further exacerbating Hawaii’s physician shortage.
Research has shown that access to Medicaid increases the health of enrolled children even into adulthood, in turn leading to better educational outcomes and eventually higher paying careers. This creates a positive feedback loop, whereby more high earners increase tax revenue for the state, easing fiscal pressure for funding of the program. Their improved health decreases the need for health care utilization in the first place, bolstering Medicaid’s economic viability further.
It is difficult to overstate the importance of Medicaid for the physical and mental health of residents of Hawaii. It is equally important to recognize its crucial role in ensuring our economic health, both now and in the future. Federal funding of Medicaid is necessary to ensure this vital program remains solvent in Hawaii. Now is the time for everyone to urge our state and national representatives to ensure no federal funding cuts be implemented for Medicaid.
Dr. Joe Pummer is a family medicine physician on Oahu.
