Cash-strapped state wants to defer health premiums

The state proposes to defer three months of payments to health plans for its public health insurance program until next fiscal year, a moved that has insurers scrambling to come up with enough cash to float the bill.

Three local health plans, Hawaii Medical Service Association and the nonprofits Kaiser Permanente and AlohaCare, have contracts with the state Department of Human Services to participate in the state’s version of Medicaid, the Med-QUEST program, which offers free health insurance to low-income families. Two other plans, United Health Group and Ohana Health Plan, have contracts for the state’s QUEST expanded-access program, which covers the aged, blind and disabled population.

The plans typically receive payments from the state around the third week of the month, which they then use to reimburse doctors, hospitals and community health centers for providing services to QUEST-covered patients.

Legislators turn over rocks looking for new revenues

Meanwhile, looking to close a $1.23 billion hole in the state budget, lawmakers are looking at sources other than the four counties’ share of the hotel room tax. As the end of February approached, the House Finance Committee also decided not to hike the general excise tax.

These were among a slew of tax proposals being considered as lawmakers work against a deadline to complete work on bills before exchanging proposals for further vetting and crafting. Among the most prominent measures being considered by the Finance Committee was House Bill 2598, which proposed to take the Transient Accommodations Tax from the counties.

TAT ‘scoop’ and GET hike deferred, for now

Rather than take the full $100 million estimate for the upcoming fiscal year, the committee decided to temporarily cap the amount of TAT money going to the counties at the current level of $94.3 million a year. The state would get any revenue above that amount and the cap would be in place for the next five fiscal years, starting July 1.

Mayors and other county executives had lobbied hard against the TAT scoop, saying the loss of those funds would lead to larger budget deficits on their ends and force them to consider increases in property taxes. Gov. Linda Lingle and legislative leaders including House Speaker Calvin Say support the TAT scoop. The Senate may yet decide to agree, but any changes in the bill would have to be worked out in conference committee.

Meanwhile, the committee deferred HB 2876, which would have temporarily increased the general excise tax and use tax rates by one percentage point to 5 percent. The measure included provisions to offset the tax hikes for construction projects and aid low-income taxpayers: a one percent increase, to 5 percent, in the tax credit for capital goods such as equipment and machinery, and an increase in the refundable food excise tax credit by $10 per exemption.