Posted on: Thursday, February 7, 2002

Financing issue stalls long-term care bill

By Lynda Arakawa
Advertiser Capitol Bureau

A bill that would authorize a $10 monthly tax to pay for long-term care for the disabled is running into problems at the Legislature, largely because it is not clear how the money would be collected.

Dozens of people testified yesterday at a Senate Health and Human Services Committee hearing on the bill. The proposal involves levying a tax on residents ages 25 to 98. Those eligible for benefits under the CarePlus program would receive a $70 daily cash benefit for as long as a year.

Under a proposed draft bill, the tax would be collected from paychecks. But some supporters said that departs from the intent of the program because it excludes retirees and others who do not work. They said collecting the tax when residents file income tax returns would be another option.

Committee Chairman David Matsuura, D-2nd (S. Hilo, Puna), deferred making a decision on the bill until Friday, but said he intends to advance legislation that includes retirees and others, possibly using the income tax model.

The bill faces challenges, as lawmakers do not like to levy taxes in an election year.

Meanwhile, the state Tax Department has resisted involvement in the program. Tax Department Director Marie Okamura submitted testimony opposing a payroll tax for long-term care. She said collecting the money through income tax returns also was problematic, because not everyone needs to file a return, some file only to get tax credits, and the system would be difficult to enforce.

CarePlus supporters, including First Lady Vicky Cayetano, called the program a critical first start in helping residents pay for long-term 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.

Supporters also urged the committee not to let financing details delay the issue.

"While it may be true that the devil is in the details, details can also sometimes bedevil us into inaction," said Hawaii Long Term Care Association president Bob Ogawa. "What is most critical at this point is that the commitment to meaningful action be made."

Insurance representatives, however, said most employers offer long-term disability coverage, and some long-term care policies offer better benefits at comparable cost.

They also said the program would put a burden on taxpayers. Tax Foundation of Hawai'i president Lowell Kalapa said the proposal is an inadequate response to the long-term care issue and noted the cash benefits might be subject to taxes.