1 See United States Census Bureau, Health Insurance Coverage: 1998 (visited Mar. 28, 2000) <http://www.census.gov/hhes/www/hlthin98.html>.

2 See id.; Robert Pear, More Americans Were Uninsured in 1998, U.S. Says, N.Y. Times, Oct. 4, 1999, at Al.

3 Bob Grossman & Jim Shon, the Unfinished Health Agenda: Lessons From Hawai'I viii (1994).

4 In 1998, Hawai'i had a population of 1.2 million people. See Aarp, Across the States: Profiles of Long Term Care Systems 57 (1998). Ten community health centers served 77,489 low-income people, providing 295,195 billable patient visits. See Hawai'i State Primary Care Ass'n, Annual Report 12 (1997-98). In the U.S. as a whole, 700 federally funded health centers serve a total population of 275 million people. See Rand Rosenblatt et al., Law and the American Health Care System 106 (1997). Hawai'i has more than three times as many community health centers, per capita, as the Nation as a whole. See id. Four of these centers do not receive direct federal subsidies. See Hawai'i State Primary Care Ass'n, supra note 4.

5 For example, Hawaii ranks 44th in the rate of low birth weight babies, 45th in the proportion of smokers, 47th in the rate of new cancer cases, 47th in heart disease death rate, 50th in the mortality rate of people over 65, 49th in the hospital admission rate, 50th in the emergency room visit rate, 1st in the rate of routine office visits, 4th in vaccination rates, and 51st in Medicare payments per beneficiary. See AARP, Reforming the Health Care System: State Profiles 1996 220-24 (1996). In 1997, Hawai'i's mortality rates for major categories of disease were lower than rates for the U.S. as a whole, except for breast cancer and suicide. See Hawaii Health Info. Corp., Health Trends in Hawaii: A Profile of the Health Care System 20 (4th ed. 1999). Life expectancy in the state is 79 years, four years longer than the U.S. average. See id. at 18.

6 Hawaii spends roughly 11% of the Gross State Product on health care versus a national figure of nearly 15%. See Deane Neubauer, Health Care and Money: Perspective in the Policy Debate Over Cost Control, in The Unfinished Health Agenda: Lessons From Hawai'i, supra note 3, at 53, 65. In 1997, Hawai'i's inflation rate for medical care was 1.1%, while the general U.S. inflation rate for medical care was 2.8%. See Hawaii Health Info. Corp., supra note 5, at 42.

Many factors explain Hawai'i's relatively low health care costs. Most observers believe that high levels of insurance coverage reduce irrational use of higher cost health care resources and relieve insured people of the burden of financing care for the uninsured. See Neubauer, supra note 6, at 64. Genetics, climate and emphasis on primary care are also thought to be important. See id. Relative lack of competition in the health care financing market may also contribute to lower costs.

7 See Haw. Rev. Stat. Ann. § 393-2 (Michie 1999). The mandate applies to employees who work at least 20 hours a week for at least four consecutive weeks. See id. § 393-3. State law does not, however, require that health benefits negotiated through collective bargaining be equivalent to those mandated by state law. See id. § 393-2; see also Council of Hawaii Hotels v. Agsalud, 594 F. Supp. 449, 449 (D. Haw. 1984) (holding that the Hawai'i Prepaid Health Care Act of 1974 can not be preempted by the Employee Retirement Income Security Act (ERISA)). State employees who are classified as “emergency hires” are also not covered. See Jim Shon, It's Not as Pathetic as It Seems, in The Unfinished Health Agenda: Lessons From Hawai'i, supra note 3, at 97,97.

8 See Haw. Rev. Stat. Ann. § 393-13. The statute also provides that collective bargaining agreements may specify greater employee contributions. See id.

9 See id. § 393-45. But see Deane Neubauer, Hawaii: The Health State, in Health Policy Reform in America: Innovations from the States 147, 156 (Howard M. Leichter ed., 1992) (asserting that employers rarely take advantage of this state subsidy).

10 From the overthrow of the Hawaiian monarchy in 1893 until the onset of World War II, political, social and economic life in Hawai'i was dominated by a Caucasian elite that combined a plantation economy with Christian missionary roots. See Emily Friedman, the Aloha Way: Health Care Structure and Finance in Hawaii 3-24 (1993). They worked through the Republican party. See id. at 57. Hawai'i's plantation economy differed from mainland agricultural economies in two important ways. First, Hawai'i's plantation owners provided a comprehensive network of community-based health services. See id. at 14-24. Second, by the mid-twentieth century, Hawaiian agricultural workers were, for the most part, unionized. See id. at 25-30.

11 After World War II, Japanese Americans became more influential in Hawaiian politics, working through the Democratic Party. See id. at 57. Since 1954, Hawai'i has been solidly Democratic at both the state and federal levels. See id. Serious disputes divide Hawai'i Democrats.

12 See Henry A. Foley, What Are the Facts: Is Prepaid Worth Preserving, in The Unfinished Health Agenda: Lessons from Hawai'I, supra note 3, at 75,76.

13 See Freidman, supra note 10, at 60.

14 Some unions in Hawai'i held these views and opposed the Prepaid Health Care Act. See id.

15 Leighton Ku & Shruti Rajan, Hawaii: Health Quest, in Increasing Insurance Coverage Through Medicaid Waiver Programs: Case Studies 15 (1994).

16 See 42 U.S.C. § 1315 (1994) (approving demonstration projects); Judith Wooldridge et. al., Mathematica Pol'y Research, inc., Reforming State Medicaid Programs: First-Year Implementation Experiences From Three States 2 (1997).

17 See Suzanne Rotwein et al., Medicaid and State Health Care Reform: Process, Programs and Policy Options, Health Care Fin. Rev., Spring 1995, at 105, 105 (discussing section 1115 waivers and early demonstration projects in Oregon, Hawai'i, Tennessee, Rhode Island, Kentucky and Florida); John Holahan et al., Insuring the Poor Through Section 1115 Waivers, Health Aff., Spring 1995, at 199, 200. States without section 1115 waivers are free to increase federal payments by expanding the number of people eligible for Medicaid, services covered, or reimbursement paid. Some see section 1115 demonstrations as opportunities for “innovation.” See Bruce Vladeck, Medicaid 1115 Demonstrations: Progress Through Partnership, Health Aff., Spring 1995, at 217, 217-18. Others see them as a threat to the rights of vulnerable people. See Sara Rosenbaum, Mothers and Children Last: The Oregon Medicaid Demonstration, 18 AM. J.L. & Med. 97, 114 (1996).

18 SeeKu & Rajan, supra note 15, at 15.

19 See Wooldridge et al., supra note 16, at 3.

20 See id.

21 See id.

22 See id. at 4.

23 See id.

24 See Haw. Admin. Rules § 17-1727 (1999).

25 See Ku & Rajan, supra note 15, at 15.

26 In the first year of operation, Health Quest enrolled 157 thousand members, 47 thousand more than the state had anticipated would enroll in Health Quest. Hawaii Dep't of Human Servs., Draft Quest II Waiver, at IV-II.

27 Tourism is Hawai'i's most important industry. From 1990 to 1993, Hawai'i experienced its worst tourism slump in the post-World War II era, with total visitor arrivals to the state falling by 12%. See Hawai'i Dep't of Bus., Econ. Dev. & Tourism, Hawaii Tourism in Transition (last modified May 27, 1999) <http://www.state.hi.us/dbedt/helq/transit.html>. With the recovery of the Japanese economy, and the growth of other Asian economies, by the end of 1999 tourism was surpassing previous records. See id.; see also Research & Econ. Analysis Div., Hawaii Dep't of Bus., Bcon. Dev. & Tourism, Economic Trends and Outlook 9 (1999) (table detailing 1999 Hawaiian economic activities); Paul H. Brewbaker, Bank of Hawaii, Hawaii Economic Trends 3 (Oct. 1999) (discussing Hawai'i's improving economy).

28 See Hawai'i Dep't of Bus., Econ. Dev. & Tourism, Hawaii Tourism in Transition (last modified May 27, 1999) <http://www.state.hi.us/dbedt/helq/transit.html>.

29 See Research & Econ. Analysis Div., supra note 27, at l.

30 Informed people often assert that Quest asset limits were increased and eligibility restricted “because” the program was prohibited from discriminating against the aged, blind and disabled. For example, a 1996 report by the Hawai'i State Auditor observes, “an asset test was added on April 1, 1996 as a result of a legal challenge based on the Americans with Disabilities Act." The Auditor, State of Hawaii, Rep. No. 96-19, Audit of The Quest Demonstration Project 3 (Dec. 1996) [emphasis added]. The federal court decision prohibiting discrimination against the aged, blind and disabled did not mandate imposition of a more stringent assets test, or elimination of adult dental service. See Burns-Vidlak v. Chandler, 939 F. Supp. 765 (D. Haw. 1996). It seems more plausible that Quest was restricted and capped because it found more uninsured people than anticipated and the state was experiencing economic difficulty. The aged, blind and disabled (and the federal court) were made scapegoats for cuts motivated by other concerns.

31 See Burns-Vidlak, 939 F. Supp. at 773. In response, the state agreed to include these groups in Quest. See id. at 768. The parties continued to litigate the question whether plaintiffs may claim punitive damages against the state for the exclusion from 1994 to 1996. See Burns-Vidlak v. Chandler, 980 F. Supp. 1144, 1151 (D. Haw. 1997) (holding that plaintiffs may claim punitive damages against the state for violations of the Americans with Disabilities Act); see also BurnsVidlak v. Chandler, 165 F.3d 1257 (9th Cir. 1999) (appeal dismissed for lack of jurisdiction).

32 See Wooldridge et al., supra note 16, at 15.

33 See Hawai'i State Primary Care Ass'n, supra note 4, at 12. 34 For a moving description of particular people in need of help, see generally Jon Martell, Another Day for You and Me in Paradise: Health Care for the Homeless, in The Unfinished Health Agenda: Lessons From Hawai'i, supra note 3, at 3.

35 See Hawaii Health Info. Corp., supra note 5, at 79.

36 See Hawai'i State Primary Care Ass'n, supra note 4, at 13. 37 In 1996, Hawai'i had 97.9 hospital admissions per 1000 citizens, while the national average was 127.1. Hawai'i had 213.2 emergency room visits per 1000 citizens, while the national average was 368.3. AARP, supra note 5, at 52.

38 Medicaid fee-for-service payments were set at 116% of Medicare rates. See Henry A. Foley, Hawai'i's Insurance Strategy: What Are the Facts? Is Prepaid Worth Preserving?, in The Unfinished Health Agenda: Lessons From Hawai'i, supra note 3, at 75, 80.

39 See Rotwein et al., supra note 17, at 109 (describing Quest as a capitated managed care plan).

40 In 1999, the Hawai'i legislature passed bills “Relating to Quest” requiring that Quest payments be more closely related to medical risk characteristics of enrollees. S.B. 1562, 20th Leg. (Haw. 1999) (Governor vetoed Apr. 1999); H.B. 1413, 20th Leg. (Haw. 1999) (Governor vetoed Mar. 1999).

41 See AARP, supra note 4, at 54.

42 See Hawaii Health Info. Corp., supra note 5, at 16.

43 In 1994, health spending in Hawai'i was $2,883 per capita, while health spending in the U.S. was $3,068 per capita. See AARP, supra note 4, at 53.

44 In 1995, 9.0% of Hawai'i's state budget was devoted to Medicaid, while in the U.S. as a whole, Medicaid consumed 19.2% of state budgets. See AARP, supra note 4, at 53.

45 See Hawaii Health Info. Corp., supra note 5, at 37.

46 See Hawaii Medical Service Association, Annual Report 12 (1998).

47 See Hawaii Health Info. Corp., supra note 5, at 37.

48 See id.

49 See, e.g., Antonia Maioni, Parting at the Crossroads: The Emergence of Health Insurance in the United States and Canada (1998).

50 Excess bed capacity directly produces excess financial costs. In addition, it encourages provision of services that are unneeded or marginally necessary, increasing risks to patients. See, e.g, Mark R. Chassin et al., Does Inappropriate Use Explain Geographic Variations in the Use of Health Care Services?, 258 Jama 2533 (1987).

51 See Helen Altonn, HMSA, Medical Coalition at Odds Over Health Plans, Honolulu Star-Bull., Nov. 12, 1999, at Al.

52 See id.

53 See id. The proposed contract provided for a two-step process of administrative review and arbitration to resolve disputes between HMSA, physicians and patients. See id. The appeals process was systematically structured to favor HMSA. HMSA had total control over appointment of the members of the initial review committee, and final authority over selection of the arbitrators to hear appeals. See id.

54 See id.

55 See, e.g.. In re Rate Filing of Blue Cross Hosp. Serv., Inc., 214 S.E.2d 339 (W.Va. 1975) (holding Commissioner's statutory duty to determine that subscriber premiums were reasonable created an implied authority to determine that payment rates to hospitals were reasonable).

56 Haw. Rev. Stat. Ann. § 432E-3 (Michie 1999). Recognizing that it is an enormous regulatory task to provide these assurances, the legislature has also required that health insurers pay the Insurance Commission $10,000 per 70,000 non-governmental members, “to defray any administrative costs, including personnel costs, associated with health insurance regulation.” Id. § 431:2-216. Larger plans are required to pay additional amounts, on a prorated basis, up to a maximum of $1 million per year. See id.

57 See Notice of Charges and Order to Show Cause Why a Cease and Desist Order Should Not be Issued, In re Hawaii Med. Serv. Ass'n, Insurance Div., Hawai'i Dep't of Commerce & Consumer Affairs, (filed Jan. 12,2000).

58 Insurance Division, Dep't of Commerce & Consumer Affairs, State of Hawai'i, In re Hawaii Med. Serv. Ass'n (May 2, 2000). Both sides declared a victory. See HMSA, State Reach Accord on Physician Contracts. Honolulu Star Bull., May 3, 2000. HMSA asserted that because the provider participation agreements are not part of the “business of insurance” under federal law, state regulation of such agreements is preempted by federal law. See Hawaii Med. Serv. Ass'n's Motion to Dismiss the “Notice of Charges and Order to Show Cause Why a Cease and Desist Order Should Not be Issued, " In re Hawaii Med. Serv. Ass'n, (filed April 5, 2000). The author argued that federal law does not prohibit state regulation of provider participation agreements. Letter from Sylvia A. Law to Commissioner Wayne Metcalf 2-8 (May 1, 2000) (on file with author).

59 See Kevin Dayton, State Hospitals in Fiscal Crisis, Honolulu Advertiser, Nov. 12, 1999, atAl.

60 Id. at A6.

61 Excluded workers include emergency state employees, workers covered by collective bargaining agreements, independent contractors and part-time workers. See supra notes 7-8.

62 In the U.S., about a third of workers are “contingent,” i.e., part-time or temporary. See Jered Berstein et al., The State of Working America 242 (1998). In a service economy, that figure is likely to be higher. See id. at 248-49.

63 Interview with A. Joris Watland, Executive Director of Kokua Kalihi Valley Health Center (Sept. 23, 1999).

64 See Hawaii Health Info. Corp., supra note 5, at 16-17 (overview of health), 18-19 (life expectancy), 23 (cancer incidence rates), 24 (AIDS/HIV rates), 36 (overview of health market), 144 (consumer price index).

65 See supra note 9, and accompanying text.

66 Former Hawai'i State Senator and progressive health care advocate, Jim Shon, offered a devastating critique of the failures of the state's health care financing system, but he concluded “Perhaps our own failings will drive us to a more unified and coordinated system, more rationally constructed.” See Shon, supra 7, at 106.

67 See 29 U.S.C. § 1144(a) (We.it 1999).

68 See id. § 1001.

69 ERISA “contains almost no federal regulation of the terms of benefit plans. It does, however, contain a broad pre-emption [sic] provision declaring that the statute shall 'supercede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.'” Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 732 (1985).

70 See 29 U.S.C. § 1144(a).

71 See generally Rosenblatt et al., supra note 4, at 159-211, 467-78, 495-510, 475-537.

72 See Metropolitan Life Ins. Co., 471 U.S. at 732.

73 See United Wire, Metal & Mach. Health & Welfare Fund v. Morristown Mem'l Hosp., 793 F. Supp. 524, 526 (D.N.J. 1992) (holding that ERISA preempted New Jersey's pioneering program to create a fund to pay hospitals for uncompensated care). The Third Circuit Court of Appeals ultimately reversed the United Wire district court decision, see 995 F.2d 1179, 1195 (3d Cir. 1993), but the state program had already been dismantled. See id. at 1190.

74 See Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 54-57 (1987); Corcoran v. United Healthcare, Inc., 965 F.2d 1321, 1331-33 (5th Cir. 1992).

75 See Standard Oil Co. v. Agsalud, 633 F.2d 760, 766 (9th Cir. 1980), affd. mem., 454 U.S. 801 (1981).

76 Freidman, supra, note 10, at 66-67.

77 See id. at 68.

78 See id. at 67.

79 See 29 U.S.C. § 1144(b)(5)-(6) (West 1999). 8°/rf.

81 See Council of Hawaii Hotels v. Agsalud, 594 F. Supp. 449 (D. Haw. 1984).

82 See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 649 (1995). The Court upheld New York's comprehensive hospital rate-setting program designed to constrain costs and to provide subsidies to hospitals that provide disproportionate amounts of care to people who are uninsured. See id. The Court held that, even though ERISA employee benefit plans bear the brunt of the financial costs imposed by the New York law, the law did not “relate to” an ERISA plan. See id. at 662.

83 See Robert Pear, Series of Rulings Eases Constraints on Suing H.M.O. 's, N.Y. Times, Aug. 15, 1999, at Al.

84 See Bipartisan Consensus Managed Care Reform Act, H.R. 2990, 106th Cong. § 1302 (1999).

85 Even though the Bipartisan Consensus Managed Care Improvement Act of 1999 passed the House by a vote of 275 to 151 (including 68 Republicans), see 2 Cong. Index (CCH) 37,126 (Oct. 7, 1999), 10 of the 12 people whom the House leadership appointed to the Conference Committee had opposed the bill. See David E. Rosenbaum, Not Quite Business as Usual in House on Managed Care, N.Y. Times, Nov. 4, 1999, at Al.

86 See Robin Toner, Health Care Brings Out Contrast in Candidates, N.Y. Times, Nov. 8, 1999, at Al. Gore favored expanding Medicaid, while Bradley favored abolishing Medicaid and subsidies to allow people to enroll the health insurance program now offered to federal employees. See id.

87 The Clinton health plan built on the American tradition of relying upon private corporations to weave the safety net: health care benefits, old age pensions, job security and vacations. See James A. Morone, Nativism, Hollow Corporations, and Managed Competition: Why the Clinton Health Care Reform Failed, 20 J. Health Pol., Pol'y & L. 391, 395-96 (1995). The U.S. welfare state was constructed around the private system, filling in the gaps and regulating benefits. Professor James Morone argues, “[t]he Clinton administration's failure to lock in health care coverage for full-time employees is more than the latest miss in a long line of health care reform failures. This time we face the rapid disintegration of American health security, not just the safety net, but the basic infrastructure.” Id. at 396. A new international economic order is creating an economy of “hollow corporations” and “contingent workers.” Id. at 395.

88 See Friedman, supra note 10, at 25-27.

89 See Milton Derber & Edwin Young, Labor and the New Deal (1957). 9 0 See Marie Gottschalk, 77ie Missing Millions: Organized Labor, Business, and the Defeat of Clinton's Heath Care Security Act, 24 J. Heal. Pol., Pol'y & L., 489, 494 (1999).

91 See id. at 495. In 1991 Robert Georgine, former AFL-CIO vice president, became Chairman and Chief Executive Officer of the Union Labor Life Insurance Company. See id.

92 See id. at 495-96.

93 See McGann v. H & H Music Co., 946 F.2d 401 (5th Cir. 1991); Tom Stoddard, Now You're Insured, Now You're Not, ~H.Y. Times, May 23, 1992, at A23.

94 See Gottschalk, supra note 90, at 496.

95 See id. at 495.

96 See id. at 502.

97 See id.

98 See id. at 502-05.

99 See id. at 508.

100 See id. at 511.

101 See id. at 511-12.

102 See id. at 513.

103 See id.

104 See id.

105 See id. at 513-14.

106 James A. Marone, Populists in a Global Market, 24 J. Heal. Pol., Pol'y & L. 887, 889 (1999).

107 See id. at 888. Many of the state laws may be held to be preempted by ERISA if they are challenged.

108 There are many serious problems that this Article w:ll not address. Native Hawaiians suffer acute health problems and have limited access to appropriate care. For example, Native Hawaiians have the lowest life expectancy of any ethnic group in the state, though still higher than the U.S. as a whole. See Hawaii Health Info. Corf., supra note 5, at 19; Richard Kekuni Blaisdell, Health Status of Kanaka Maoli (Indigenous Hawai'ians), 1 Asian American & Pac. Islander J. of Health 116 (1993). Options for long-term care, a problem everywhere, may be worse in Hawai'i. See generally Jeanette Takamura & Marilyn Seely, Beyond Mirrors and Smoke: The Challenge of Longevity and Long-Term Care, in The Unfinished Health Agenda: Lessons From Hawai'i, supra note 3, at 17. Hawaii was a pioneer for reproductive choice, legalizing abortion in 1970 and including coverage for abortion by Medicaid since that time. See Haw. Rev. Stat. Ann. § 453-16 (Michie 1999); see also Merz et al., A Review of Abortion Policy: Legality, Medicaid Funding, and Parental Involvement, 1967-1974, 17 Women'S Rts. L. Rep. 1, 21 (1995) (discussing that while formal state rules remain protective of choice and confidentiality, the integration of family planning services into primary care, and the enrollment of families in the same plans may create problems in access to confidential contraceptive services for teens).

109 Hawaii Health Info. Corp., supra note 5, at 104-05.

110 The lower estimate is provided by the Med-Quest Div., Hawai'i Dep't of Human Servs., Title XXI State Plan Proposed Amendments 9 (submitted to the U.S. Health Care Finan. Admin (HCFA), Jan. 18, 2000). The higher estimate is provided by the Hawai'i State Primary Health Care Association. See Helen Altonn, Groups Seek Kids With No Insurance: A Campaign Tries to Enroll Children Eligible for Health Care Assistance, Honolulu Star-Bull., July 15, 1999, at A3.

111 See Haw. Rev. Stat. Ann. § 393-13.

112 Quest-Net is available to families earning up to 200% of the poverty line, if the program has not reached its enrollment cap. See 42 U.S.C. § 1397jj(c)(4) (West 2000). For a family of three, 200% of the poverty line was $27,760 in 1999. The Quest-Net premium is $61.80 per person per month, or $184.40 a month for a three person family.

113 See discussion infra Part IV.C.

114 See Hawaii Health Info. Corp., supra note 5, at 26.

115 Balanced Budget Act of 1997, Pub. L. No. 105-33, § 2101(a), 111 Stat. 251, 552 (codified at 42 U.S.C. § 1397aa).

116 See 42 U.S.C. § 1997dd.

117 See id. § 1397aa(d). The Children's Health Insurance Program (CHIP) offers the states great flexibility in providing health insurance to low-income children. States may expand Medicaid eligibility, create a new program to serve low-income children who are not eligible for Medicaid, or use a combination of these two approaches. See id. §§ 1397aa(a), I397ee. CHIP benefits must be limited to children in families with income below 200% of the federal poverty line. See id. § 1397jj(c)(4). Because CHIP seeks to expand the number of children who have health insurance coverage, it requires that states screen children who apply for non-Medicaid CHIP assistance and enroll them in Medicaid, if they are eligible. See id. § 1397bb(b)(3). Finally, CHIP requires that states make a matching contribution of 35% to claim federal dollars. See id. § 1397ee; see also Med-Quest Div., Hawai'i Dep't of Human Servs., Title XXI Program (submitted to HCFA Oct. 22, 1998, approved, Jan 19, 1999, effective Jan. 3, 2000) [hereinafter Hawai'i CHIP Plan].

118 See Hawai'i CHIP Plan, supra note 117.

119 See National Governors Ass'n, Press Release, Nation's Governors are Proud Partners in Effort to Expand Health Insurance to America's Children: States Act Quickly to Seek Out and Enroll Uninsured Children (Feb. 18, 1998).

120 See American Academy of Pediatricians, State Activity in Response to Title XXI (SCHIP) (last modified Nov. 1999) <http://www.aap.org/advocacy/newpIans.htm>.

121 See Health Care Finan. Admin, HHS Approves Hawaii Plan for Children 's Health Insurance (last modified Jan. 27, 1999) <http://www.hcfa.gov/init/990119hi.htm>.

122 See id.

123 See Health Care Finan. Admin, Hawaii Title XXI Program Fact Sheet (last modified Jan. 27, 1999) <http://www.hcfa.gov/init/chpfshi.htm>.

124 See Hawai'i CHIP Plan, supra note 117.

125 See Letter from Nancy-Ann Min DeParle, Administrator, HCFA, to Susan Chandler, Director, Health Care Admin. Div. of the Hawai'i Dep't of Human Servs. (Jan. 19, 1999), available in Health Care Finan. Admin., Hawaii Approval Letter (last modified Jan. 27, 1999) <http://www.hcfa.gov/init/chpalhi.htrn> (approving Hawai'i's CHIP application in light of information supplied on Dec. 28, 1998).

126 See Haw. Rev. Stat. Ann § 328L-4 (Michie 1999).

127 As of October 1, 1999, Hawai'i, Washington and Wyoming were the only U.S. states that had not yet implemented their CHIP programs. See Health Care Finan. Admin., State Children's Health Insurance Program, Annual Enrollment Report: Fiscal Year 1999 3 (1999). CHIP programs vary in size. At the high end, California enrolls 222,351 children, New York, 521,301 and Florida, 154,594. See id. at 14 tbl. 1 (detailing 1^99 CHIP enrollment rates in every U.S. state). At the low end, North Dakota serves only 266 children, Arkansas, 913 and Minnesota only 21. See id. By comparison, Hawai'i's promise to serve 440 children, if the tobacco settlement money comes through, is inconsistent with its claim to be the “health state."

128 See Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193, 110 Stat 2105 (codified as amended in scattered sections of 42 U.S.C).

129 See Medicaid Program, Allocation of Enhanced Federal Matching Funds for Increased Administrative Costs Resulting from Welfare Reform, 62 Fed. Reg. 26,545, 26,546 (1997).

130 See id. at 26,548.

131 See Letter from Linda Minamoto, Associate Regional Administrator, Div. of Medicaid, HCFA to Charles C. Duarte, Med-Quest Administrator, Hawai'i Dep't of Human Servs. (Nov. 18, 1999).

132 See supra note 27, and accompanying text.

133 See supra note 6, and accompanying text.

134 For example, in 1998, the Hawaiian legislature appropriated $3.3 million to bring the Miss Universe show to Hawai'i. See 1998 Haw. Sess. Laws 15. Local businesses were expected to donate an additional $2 million in goods and services. See id.

135 See Federal Financial Participation in State Assistance Expenditures; Federal Matching Shares for Temporary Assistance to Needy Families, Medicaid, Aid to Needy Aged, Blind, or Disabled Persons and for the new Children's Health Insurance Programs for October 1, 1999 through September 30, 2000, 64 Fed. Reg. 1805, 1806 (1999) (setting the FY200 Enhanced Federal Medical Assistance Percentage (FMAP) for Hawai'i at 65.71%); see also State Children's Health Insurance Program; Reserved Allotments to States for Fiscal Year 1998; Enhanced Federal Medical Assistance Percentages, 62 Fed. Reg. 48,098 (1997) (explaining HCFA's procedures for determining the FMAP percentages).

136 Interview with Beth Giesting, Executive Director, Hawai'i Primary Health Care Ass'n (Nov. 17, 1999).

137 For example, the 1996 State Auditor's report stated that Quest “would cost the state government no more than what the existing programs would cost.” The Auditor, State of Hawai'i, supra note 30, at 3. The assumption of a fixed pot is reflected in the restrictions imposed in 1995 and 1996. See id. “Expanding EPSDT would be a Pyrrhic victory because we would have to cut some place else.” Telephone Interview, with Charles Duarte, Med-Quest Administrator, Hawai'i Dep't of Human Servs. (Dec. 1, 1999).

138 Monitoring the Federal Budget Limit for the Hawai'i Health Quest Demonstration. The Auditor, State of Hawaii, supra note 30, app. B.

139 See id.

140 See Med-Quest Div., supra note 110.

141 See 62 Fed. Reg. at 48,099 (explaining that states must have approved CHIP plans in place by the beginning of the fiscal year in order to receive federal allotments under the program).

142 See 42 U.S.C. § 1397 (1999). ' « See id. § 1397(b); id. § 1397ff.

144 There may be other problems. Under the federal Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRA), the states—including Hawai'i—terminated cash assistance benefits. See Gordon Pang, 1,055 Isle Families Kicked Off Welfare, Honolulu Star-Bull., Aug. 26, 1999, at Al. See generally Claudia Schlosberg & Joel D. Ferber, Access to Medicaid Since the Personal Responsibility and Work Opportunity Reconciliation Act, 31 Clearinghouse Rev. 528 (1998) (noting that in many states, the end of cash benefits has led to the loss of Food Stamps and Medicaid). See, e.g., Reynolds v. Giuliani, 35 F. Supp. 2d 331, 347 (S.D.N.Y. 1999) (enjoining welfare practices that discouraged eligible people from applying for and promptly receiving Medicaid and Food Stamps. The court found that in limiting cash assistance, Congress did not intend to terminate eligibility for Medicaid and Food Stamps, and that states administering the PRA must assure the continued eligibility of poor people who still qualify for Medicaid and Food Stamps.) The question of whether Hawai'i's implementation of welfare reform has met federal obligations to preserve Medicaid and Food Stamp eligibility needs attention.

145 See 42 U.S.C. § 1396a(a)(8) (1999). Medicaid administrators are required to make eligibility determinations within 45 days of receiving an application. See 42 C.F.R. § 435.911(b) (1999).

146 See Complaint Letter from Sylvia A. Law, Professor, NYU School of Law, and others, to Charles Duarte, Med-Quest Administrator & Susan Chandler, Director, Hawai'i Dep't of Human Servs. (March 30, 2000). (on file with author).

147 See Beverly Creamer, Quest Agrees to Reforms: Access Eased after Criticism, Honolulu Advertiser, Apr. 18,2000, at Al.

148 See Salazar v. District of Columbia, 954 F. Supp. 278, 328-33 (D.D.C. 1996).

149 See 42 U.S.C. §§ 1396(a)(10), 1396(a)(43), 1396d(a)(4)(B), 1396d(r). Early and Periodic Screening, Diagnosis, and Treatment (EPSDT) requires four separate types of screens: medical, vision, hearing and dental. The medical screen must include a comprehensive, unclothed physical examination, including health and developmental assessment of physical and mental health, appropriate immunizations, laboratory tests (including lead blood testing at 12 and 24 months and otherwise according to age and risk factors) and health education, including anticipatory guidance. See42C.F.R. §441.56.

150 See Med-Quest Div., Hawai'i Dep't of Human Servs., Medical Request for Proposal (July, 1997).

151 See Mitchell v. Johnston, 701 F.2d 337, 340 (5th Cir. 1983) (stating that triennial access to preventative health services does not achieve the preventative purposes of the EPSDT program). For example, a federal district court in Tennessee found that the managed care organizations with which the state had contracted had failed to do the outreach required by federal law, systematically failed to provide required screening and failed to provide necessary services on a timely basis. See John B. v. Menke, No. 3-98-0168 (M.D. Tenn. Aug. 28, 1998). In addition, the court found that the state had failed to measure provider performance of EPSDT obligations. The parties entered into a consent decree agreeing on a plan to remedy the problems identified. See Consent Decree for Medicaid-Based Early and Periodic Screening, Diagnosis and Treatment Services, John B. (No. 3-98-0168); see also Consent Decree, French v. Concannon, No. 97-CV-24-B-C (D. Me. July 16, 1998) (consent decree requiring improvement in the delivery of EPSDT services to children with disabilities); Emily Q v. Belshe, No. 98-4181-WDK (CD. Cal., class certified Mar. 5, 1999) (pending case challenging inadequacies in the California EPSDT program).

152 See Fmh, Inc., Final Report, Hawaii Health Quest: Medical Early Periodic Screening, Diagnosis, and Treatment (1997).

153 See Mitchell, 701 F.2d at 340.

154 See Fmh, Inc., supra note 152, at tbls. X & 3-5. For children ages 1 to 4, dental screening and referrals were 31% of expected levels. See id. at tbl. 3. For children ages 4 to 12, screenings and referrals were 17% of expected levels. See id. at tbl. 4. For children 12 to 21, the rate was only .08% of expected levels. See id. at tbl. 5.

155 See id. at tbls. X & 3-5. For children under age 1, rates of lead risk assessment were .02% of expected rates. See id. at tbl. X. For children ages 1 to 4, lead risk assessment rates were 16% of expected levels. See id. at tbl. 3. For children ages 4 to 12, screenings and referrals were .08% of expected levels. See id. at tbl. 4.

156 Stanton v. Bond, 504 F.2d 1246, 1251 (7th Cir. 1974).