Report Title:

Health Care; Appropriation


Appropriates funds for health care services for low-income, uninsured immigrants and to study the feasibility of establishing PACE-based programs in rural communities. (SB2654 HD1)


S.B. NO.



S.D. 2


H.D. 1








SECTION 1. The legislature finds that Hawaii is one of the top five states in the nation with the highest number of immigrant residents on a per capita basis. On average, five to eight thousand immigrants enter Hawaii every year.

The legislature further finds that immigrants come to Hawaii seeking better living conditions and opportunities to work. Hawaii's businesses rely on immigrants who frequently fill low-paying, unskilled, and part-time jobs. Immigrant workers, therefore, contribute to society but are vulnerable since they lack health insurance for themselves and their dependents because of work status and poverty.

The legislature further finds that state funds are appropriated to the Hawaii immigrant health initiative, implemented by the department of human services. This initiative ensures that basic health care is available to low-income immigrants who meet medicaid eligibility criteria, but who are ineligible for medicaid coverage due to the 1996 Welfare Reform Act. However, funds currently available are inadequate to cover services needed by immigrants that are provided by community health centers and other nonprofit caregivers across the State. For example, in fiscal year 2003, billings for services rendered to eligible immigrants amounted to more than $640,000, while only $600,000 in funds were available. Since 1999, the program has served between one thousand three hundred to one thousand six hundred individuals a year.

The legislature further finds that services provided under the Hawaii immigrant health initiative are for preventive and primary health care delivered by community health centers. The medical conditions most frequently treated in this program are hypertension, diabetes, pregnancy, and respiratory ailments. If these conditions are not addressed through the Hawaii immigrant health initiative, costs for uncompensated care delivered at hospital emergency rooms and for avoidable hospitalizations will be far greater and will affect public and private insurance rates for all Hawaii residents.

The purpose of this Act is to ensure that low-income, uninsured immigrants have access to primary and preventive health care services.

SECTION 2. There is appropriated out of the general revenues of the State of Hawaii the sum of $        or so much thereof as may be necessary for fiscal year 2004-2005 for health care services for low-income, uninsured immigrants as a supplement to the $550,000 currently budgeted for the program.

The sum appropriated shall be expended by the department of human services for the purposes of this Act.


Section 3. The legislature finds that, with the aging of Hawaii’s population and its changing social, economic, and health condition, the need for more long-term care alternatives that are accessible, affordable, and comprehensive is persistent. The existing long-term care infrastructure does not adequately support current needs, and with the aging of the State's "baby boomer" population, the need to establish additional long-term care resources is upon us.

The legislature believes that the State is lagging behind in support systems that accommodate the State's frail elders. Geographic, social, economic, and cultural barriers leave a large number of elder and disabled persons without adequate supports. It is imperative that the State develop and test new ways to bring care to the frailest citizens through direct care and support in innovative programs.

The legislature finds that, since 1986, the program of all-inclusive care for the elderly (PACE) has been serving the frail elderly in the community by providing comprehensive health care and support services, which keep the elderly healthy and independent at home and avoid the need for costly nursing home care. The PACE model was founded by the renowned On Lok organization in San Francisco, California, as an effort to help families avoid placing their elderly in nursing homes. The model not only offered a comprehensive range of services such as adult day care, home care, medical care, nursing, rehabilitation therapies, nutrition, prescription drugs, and transportation, but it was able to demonstrate that these services can be provided at less cost than the traditional institutional care.

PACE uses a capitated payment system, which pools medicare, medicaid, and private pay funds. This payment system allows PACE to receive a flat, per-person monthly rate from these sources, without restrictions on services delivery and fee-for-service services limitation. This means that PACE's interdisciplinary team of health care professionals has the authority and flexibility to provide the services based on the individual person’s health and supportive care needs.

Recognizing PACE’s cost-effectiveness and its success in keeping the rate of hospitalization and nursing home placements to a minimum, the United States Congress authorized a national demonstration program in 1986 and, in 1997, authorized a "permanent provider" status for PACE-based programs.

Faced with a rapidly growing elder population in Hawaii, an acute shortage of nursing home beds, and the rising cost of long term care, the legislature, in 1991, recognized the need for an alternative community-based program that would be comprehensive, prevent institutionalization, and contain long-term care cost. Out of this recognition of need, the legislature appropriated start-up funds to establish PACE in Hawaii through Maluhia hospital, which was formerly under the state department of health, but now under the jurisdiction of the Hawaii health systems corporation. Hawaii's PACE provides a complete package of services that enhances the quality of life for the elderly participant and offers the potential to reduce and cap the costs of their medical needs.

The legislature further finds that the services provided by Hawaii's PACE costs less than what medicare, medicaid, and private individuals currently pay for long-term institutional care. Since its establishment in the State, Hawaii's PACE has served the elderly primarily in metropolitan Honolulu and recently began to serve all eligible seniors on Oahu.

Throughout the country, PACE sites have been established in a predominantly urban community. However, the elderly in the rural communities in the United States are greatly underserved, and do not receive adequate health care and other services that could maintain their independence. The need for programs like PACE in rural America is great. Compared to their urban counterparts, the rural elderly:

(1) Report worse health status;

(2) Are generally older;

(3) Have more functional limitations;

(4) Are more likely to live alone at age seventy-five and older;

(5) Are more likely to be poor or near poor; and

(6) Are at greater risk of being placed in a nursing home.

The legislature finds that this is also true for the outlying areas of Honolulu, Oahu, as well as throughout the neighbor islands of the State. To establish PACE programs in rural areas, however, will require greater creativity, flexibility, and collaboration among providers, regulators, and policy makers. Because there are fewer health care providers and a smaller population of eligible seniors who live in sparsely populated areas and often alone, there are more challenges and obstacles that will face a rural PACE program than its urban counterpart.

The legislature also finds that there is a national effort to establish a more flexible PACE model that can be molded for the diverse and unique characteristics of the rural communities. The National Program of All-Inclusive Care for the Elderly Association (Association) is composed of all PACE-based programs and developing sites in the United States. The Association, in cooperation with the National Rural Health Association, has received a contract to provide technical assistance to rural providers in developing PACE-based programs from the United States Department of Health and Human Services’ Health Resources and Services Administration.

In addition, the Association is introducing federal legislation that will give rural PACE-based programs more flexibility from the current provider requirements and is requesting start-up funds for interested providers in these rural communities.

SECTION 4. The Hawaii health systems corporation shall study the feasibility of establishing rural PACE-based programs for the outlying areas on Oahu and the neighbor islands. Building on the experience and expertise of the established PACE-based program at Maluhia hospital, under the Hawaii health systems corporation, this study shall include:

(1) An assessment of the existing health care resources in the target rural areas;

(2) A market analysis to determine population size, need, and financial viability;

(3) Technical assistance from the National PACE Association or its affiliates, or both, as made available to the Hawaii health systems corporation; and

(4) Processes by which to establish collaborative relationships with other health care providers and health care systems in rural communities.

The Hawaii health systems corporation shall submit a report of its findings and recommendations to the legislature no later than twenty days prior to the convening of the 2005 regular session.

SECTION 5. There is appropriated out of the general revenues of the State of Hawaii the sum of $50,000 or so much thereof as may be necessary to study the feasibility of establishing PACE-based programs in rural communities within the State.

The sum appropriated shall be expended by the Hawaii health systems corporation for the purposes of this Act.


SECTION 6 This Act shall take effect on July 1, 2004.