WASHINGTON — Before health care reform dominated debate on Capitol Hill, Hawai'i and several other states worked aggressively to increase the number of low-income residents covered by Medicaid, the federal-state insurance program for the poor.

Now, those efforts could end up hurting them.

The health care bill that the Senate Finance Committee approved last month would expand Medicaid coverage to people earning up to 133 percent of the federal poverty level.

But states like Hawai'i, which already have expanded eligibility for Medicaid, wouldn't see as much of a bump. Hawai'i already covers people earning more than 100 percent of the poverty level.

At a time when state governments are facing budget shortfalls, some senators say their states shouldn't be penalized for leading the expansion of health care coverage for low-income residents.

For Hawai'i's poor residents, it could mean stagnant Medicaid benefits as health care costs rise.

Under the Senate Finance Committee bill, states that already offer Medicaid to people earning at least 100 percent of the poverty level would start off getting 10 percent less in federal assistance than other states in 2014. The differential would narrow over five years, disappearing in 2019.

"We proudly represent states that have taken the initiative to expand Medicaid," U.S. Sen. Daniel Akaka, D-Hawai'i, and 13 other senators wrote in a letter to Majority Leader Harry Reid, D-Nev.

Reid is now blending two Senate health care bills into one measure that could be ready for debate within weeks.

"We are disappointed that current health care reform legislation disproportionately burdens our state, simply because we are leaders in expanding health coverage for our low-income residents," the group of 14 senators wrote.

Hawai'i's insurance requirements are credited with making it the second most medically insured state in the nation, behind Massachusetts.

More than 92 percent of Hawai'i residents have insurance, according to the independent Kaiser Family Foundation. About 84 percent of the nation is insured.

A health care overhaul bill that the House passed Nov. 7 takes a different approach.

It would expand Medicaid eligibility to people earning up to 150 percent of the poverty level and would treat states equally in terms of matching federal payments.

Those payments would cover 100 percent of expanding Medicaid eligibility in 2013 and 2014 and would cover 91 percent of expanding it beginning in 2015.

CONCERN FOR KIDS

Lillian Koller, director of the state's Department of Human Services, which administers the Medicaid program in Hawai'i, said Reid's intended bill would pena- lize Hawai'i for expanding the Medicaid program here without being told to do so by the federal government.

At the same time, it would reward states that have made little effort to expand programs to provide health care services to impoverished residents.

Hawai'i's program currently provides services to families that make up to 300 percent of federal poverty guidelines and the program is "very comprehensive" for children, Koller said.

Reid's proposal would expand health care benefits for adults here but possibly at the expense of benefits for children, Koller said.

In addition, the Reid proposal would keep states from requiring Medicaid recipients to verify they are eligible for benefits and calls for "passive renewal," which would allow recipients to continue receiving benefits without having to show periodically that they are still entitled.

Approximately 245,000 people in Hawai'i currently receive health care benefits under the state's Medicaid program at an annual cost of about $1.4 billion, Koller said.

The House health care legislation contains language to ensure that Hawai'i's expansive health coverage requirements wouldn't be weakened.

Specifically, the provisions inserted into the almost 2,000-page House bill by Hawai'i's congressional delegation would protect the state's Prepaid Health Care Act of 1974 from any changes imposed by the new federal legislation.

The health care act requires nearly all employers in Hawai'i to provide health insurance to employees who work at least 20 hours a week for four consecutive weeks.

SEEKING PARITY

Along with Hawai'i, the so-called expansion states are Arizona, Delaware, Vermont, Maine, Maryland, Massachusetts, Minnesota, New York, Pennsylvania, Washington and Wisconsin, along with the District of Columbia, according to the Finance Committee.

Senators from these states met last week with Reid to seek some form of parity in whatever health care bill comes to the Senate floor.

So far, talks have produced nothing definitive, and a spokesman for Reid has declined comment.

Reid's state and three others — Michigan, Rhode Island and Oregon — would fare well under the Finance Committee bill because of a deal Reid said he struck with the committee's chairman, Sen. Max Baucus, D-Mont. Those states would qualify for full federal funding for new Medicaid recipients for five years because they have lower-than-average Medicaid enrollment and unemployment of at least 12 percent.

"The people of Nevada are hurting, and I make absolutely no apologies, none, for helping people in my state and our nation who are hurting the most," Reid said on the Senate floor in September.

Reach John Yaukey at jyaukey@gannett.com.