Last week the state administration announced a plan to close about half of the state's budget shortfall with $320 million in federal Medicaid funds from the economic stimulus package. It is our understanding that Congress intended the infusion of Medicaid funds to give cash-strapped states like Hawai'i the resources to provide healthcare to struggling families.

AARP Hawai'i is greatly disturbed at the prospect of balancing the state budget on the backs of our poorest and most vulnerable residents. As the dismal economic news continues, families across Hawai'i are losing their jobs, savings, and even their homes. Many people are also losing health coverage.

Under these difficult circumstances, how can the state divert Medicaid funds intended to preserve and strengthen critical safety net services at the same time that people are losing their jobs and their healthcare benefits? It doesn't make sense — nor will it be viewed as sound public policy when the downturn results in higher unemployment and increased demand for basic health care services.

Unfortunately, we're already seeing evidence of rising unemployment. According to the U.S. Department of Labor, Hawai'i's unemployment rate increased to 5.5 percent in December 2008, up from 3.1 percent the previous year. That's 13,400 more residents out of work, spending down savings, and at risk of being left destitute in the event of serious illness. What are they supposed to do when a health emergency strikes?

Let's be clear: The state was already under-funding services to more than 200,000 Medicaid-eligible residents even before the economic stimulus package provided Hawai'i with a temporary 6.2 percent increase in federal matching funds for Medicaid. To cover eligible beneficiaries, the Department of Human Services was drawing from other funding pots to cover the needs of our most vulnerable citizens. Federal Medicaid funds are needed for Medicaid.

Policymakers should leverage federal dollars and not leave on the table any federal Medicaid matching funds to which Hawai'i is entitled. The Legislature and the governor should provide $8.1 million in matching funds to obtain $10 million in federal monies available for safety net hospitals that treat a disproportionate share of low-income patients. This would help hospitals and physicians that are grossly under-reimbursed for their services to our neediest residents. HB 1371 just passed the House and needs support.

We do not come easily to the conclusion that the state is unconcerned about the welfare of Hawai'i's poorest and most vulnerable residents. But how else can the raiding of the Emergency and Budget Reserve Fund be explained? The so-called rainy-day fund is intended to "maintain levels of programs determined to be essential to public health, safety, welfare and education." The fund currently has about $70 million and there's a struggle under way at the Legislature to use it to balance the budget rather than for safety-net programs. We support SB 1679, which would ensure that the fund is used as intended.

Raiding federal and state funds for vital health and welfare services would be devastating to our older residents, the disabled, low-income families and caregivers who rely on these services — especially in times of crisis.

That crisis is upon us. Families who have lost their jobs and healthcare could normally count on Medicaid as a health security safety net that would be there for them until they got back on their feet. The system must not be allowed to fail them in their hour of greatest need.

The governor should not raid the $320 million in Medicaid funds to plug holes in the budget. Only after our Medicaid needs are met should other uses for the federal funds be considered. Urge your state legislators to preserve the rainy-day funds for safety-net services (SB 1679) and to maximize federal Medicaid reimbursement funds with a state match (HB 1371).

Barbara Kim Stanton is the state director for AARP Hawai'i. She wrote this commentary for The Advertiser.