The Long Term Care Financing Board was established by the Legislature early this year and endorsed by then-Gov. Ben Cayetano, after a move to establish the tax failed to gain approval from state lawmakers.

The board recommended that the program provide a $70 daily cash benefit for as long as a year. "The benefit shall increase as follows: 2008, $72.10; 2009, $74.26; 2010, $76.49; 2011, $78.79; 2012, $81.15; 2013, $83.58," according to the report.

The financing board of trustees was charged with designing the program and determining how the state would collect, and how much would be deposited in the fund, according to Marilyn Seely, director of the state Executive Office on Aging.

Backers of the proposal see it as important for the frail, elderly and disabled who need long-term health care. They said private insurance companies have not been able to fill the need and taxpayers already pay huge sums for long-term care in Medicaid, which provides care to low-income residents.

"Long-term care is enormously costly," Seely said, and family members who care for the frail and elderly at home need assistance so they don't burn out. "They need extra help because most of the caregivers have to be in the work force."

"Our families are crying for help," Seely said, because only the very poor and the very wealthy have access to coverage and the very poor end up on waiting lists for home care.

Gov. Linda Lingle was not available to comment this morning. In her detailed agenda for what she hopes to accomplish in her administration, Lingle said she will work to provide a tax deduction or credit for long-term care insurance premium payments.

According to the report, those who are self-employed will pay the tax through estimated tax payments. Spouses would be covered on the tax return on which they are listed, which would cover those who are not working. Retirees who file state taxes would also be included and pay their share through tax filings.

The board also recommended the program be run by The Long Term Care Group Inc. or CHCS Services Inc. or both, because both companies provided detailed information and recommendations to the board. But the trustees noted that other organizations may have comparable experience to handle this.

The board noted the "urgent need" to develop new ways to help pay for expensive care of the elderly and disabled in Hawai'i. "While this is not a problem unique to Hawai'i, it is of pressing concern in our state because we have one of the fastest growing populations, 65 years of age and older."

While medical or health care insurance pays for some costs, many are not covered. The report indicated that Medicaid, the state/federal program for helping the poor, currently pays for 75 percent of all individuals receiving long-term care in Hawai'i. Add to that increasing costs of prescription drugs and pressure to move to community-based programs over institutions.

"With state revenues remaining stagnant, at best, the state share that must be put up in order to attain the federal match is not keeping pace with the needs of today's poor," the report said. "Unless the economy picks up considerably, Medicaid will fall further and further behind in being able to meet the expectations of this state's aging baby boomers."

The state Executive Office on Aging estimates the number of Hawai'i residents with long-term care insurance at 6 percent, or "abysmally short of a solution for this problem."

Under the proposal, all taxpayers with income above the minimum level required to file taxes would be required to pay the tax, regardless of age and including part-time residents who filed state tax returns.