Government-run hospitals are a critical component in the Hawai'i's health care system, but the state also relies — heavily — on private hospitals to serve its neediest residents.

And when recipients of Medicaid end up in private hospitals, the services they use are only partially paid by the government: Historically, reimbursement rates set for Medicaid beneficiaries are much too low to cover actual costs.

So the Legislature's vote to set aside $12.3 million in state funds to help cover the deficit was greeted with cheers by Isle private hospital administrators. They were all the more relieved because that grant would be more than matched with $15 million in federal funds, part of Medicaid's Disproportionate Share Hospital funding.

Unfortunately, the state administration has decided not to release the state share of the DSH funds, pointing to the severe fiscal pinch that a recessionary economy has produced.

U.S. Sen. Daniel Akaka rightly has sounded the alarm bell about this, because time to secure the federal match is ticking away. Hospital administrators have said the total is still not enough to fully cover their losses, but receiving none would deal them a dire financial blow.

Gov. Linda Lingle, facing what undoubtedly will be more bad news tomorrow when new revenue projections come in, explained that matching funds are attractive but offer no solution if the state can't even afford its own share.

While it's impossible to dispute that difficulty, the fact remains that reinforcing the state's struggling health care network must be a priority.

This allotment also should move way up on the governor's priority list because it can be leveraged with federal funds. It's reasonable to see how the state might pass up some federal matching grants, but this one is not so dispensable.

However, there's work to do for Hawai'i's state and federal lawmakers, too. The Legislature should confer with the governor to find a $12.3 million expenditure that could be cut in place of the hospital funds.

And congressional delegates should work to restore the state's equitable share of DSH funds in the regular federal budget, so this kind of scrambling won't be necessary.

The financial failure of any of the private hospitals represents too great a threat, so ensuring that costs are covered as much as possible must be seen as one of the state's core duties.