Hawaii isn’t required to fund Medicaid for migrants from three Pacific Island nations in Micronesia to make up for a reduction in federal funding, a federal appeals court ruled Tuesday.

The 9th U.S. Circuit Court of Appeals said in a ruling filed Tuesday that Hawaii has no constitutional obligation to fill a gap left in 1996 when Congress cut health care funding for migrants under the Compact of Free Association.

The cuts have been a source of tension between the state and territorial governments and the U.S. federal government over who should pay for services to the migrants.

The compact gives Palau, Marshall Islands and Federated States of Micronesia citizens the right to live and work in the U.S. In exchange, the U.S. military controls extensive strategic land and water in the Pacific Ocean between Hawaii and China — including the Kwajalein Atoll, a site of missile testing and space activities.

The opinion vacated a preliminary injunction from a lower federal court in Hawaii that stopped state health officials from reducing coverage for migrants by moving them to a more limited health system. The new system limited doctors’ visits, hospital stays and prescription drugs, while leaving migrants ineligible for organ and tissue transplants or the state’s long-term care insurance plans, according to the Tuesday ruling.

Spokeswoman Kayla Rosenfeld of the Hawaii Department of Human Services declined immediate comment on Tuesday, saying officials were still reviewing the ruling.

An attorney representing the migrants who brought forth the original lawsuit did not immediately return a message seeking comment.

In February, Guam government officials reported spending $128 million during the past fiscal year for education health care and other services for the migrants, while being reimbursed only $16 million from the federal government.

Guam, Hawaii and the Northern Mariana Islands spent more than $1 billion combined on services between 2004 and 2010, not accounting for contributions migrants made through taxes and labor.

State and local governments have pushed the federal government for more help given rising health care costs.

U.S. Rep. Colleen Hanabusa introduced a bill last year to restore Medicaid for compact migrants, while U.S. Sen. Mazie Hirono pushed for an amendment doing the same thing in a comprehensive Senate immigration bill.