For the past 40 years, a state health care law has ensured coverage for most Hawaii residents through an employer mandate, with benefits that are richer than in most other states. Government officials here have worked ever since to preserve that law, the Prepaid Health Care Act of 1974, which in many ways is superior to the federal Affordable Care Act.
Now, five years after Congress enacted the ACA, health care is in a state of flux nationwide. That turbulence is felt even more keenly in this state, which has enjoyed comparative stability and uninsured rates among the lowest in the U.S.
Hawaii elected officials are grappling with the best way to navigate through those choppy waters. For the present, the best course among dubious options seems to be the preservation of a state exchange, which is key to the preservation of the state health care law.
State leadership, from the governor’s office to the top lawmakers at the Capitol, are trying to figure out how to keep the Hawaii Health Connector, the state’s health insurance exchange, afloat. The Ige administration is meeting with federal authorities concerned about the viability of the fiscally troubled online marketplace — and who are standing ready to let the federal exchange, Healthcare.gov, take it over if the state can’t manage.
Whatever emerges from state offices over the next few weeks must satisfy not only the feds but the Hawaii taxpayer, who has already watched aghast as the Connector, currently a private nonprofit, has come up well short of sustainability.
Fees from health plan sales had been envisioned as the revenue source to underwrite the exchange, but Hawaii’s small pool of uninsured residents made that a rocky road, at least in the short term. Executives have told the Legislature the exchange needs $28 million to carry it through eight years, when it projects that revenues can cover its operational costs.
Two Senate bills that may serve as the primary vehicles for the final survival plan, SB 1028 and SB 1338, are headed for conference committees. The silver bullet isn’t yet apparent in either measure.
The intent of the House version of SB 1028, for example, is to provide the Connector with other revenue-raising options. But the Chamber of Commerce Hawaii rightly raised the complaint that giving the Connector the option of selling its services as a benefits administrator, in competition with private companies, would give it an unfair advantage. The state insurance commissioner, Gordon Ito, pointed out other potential conflicts with the ACA and state law, too.
Among other elements, SB 1338 proposes insurance reform allowing the Connector to sell to larger groups than it now does — employers with up to 100 workers, instead of 50. This brings the Connector in line with the federal threshold. That sounds reasonable as far as it goes, but it won’t be an option until 2017, so its impact on the current fiscal reality seems limited.
State Rep. Della Au Belatti and state Sen. Rosalyn Baker, who respectively chair their chamber’s health and commerce and consumer protection committees, said another option may be a straightforward state appropriation.
This might ultimately be the cleanest way forward, as long as the provision isn’t gold-plated. If the Connector does get folded into state-agency responsibilities, which Ige is exploring and which could be the best outcome, keeping down costs has to be a primary concern.
What the state needs right now is a way to keep the Connector operating and to stave off the federal takeover, at least until the legal landscape is not so cloudy.
For example, the U.S. Supreme Court is due to rule in June on a pivotal case that will determine whether health coverage sold through the federal exchange is eligible for the subsidies that make it affordable to consumers. This may not be the best time to switch off the lights at the Connector.
The even more critical concern is that up-ending the Connector would put Hawaii’s Prepaid Health Care Act at risk. Belatti said the federal exchange would not enforce the higher standards of the state law and employers would peel off to buy cheaper plans that don’t comport with state law. That could both destabilize the insurance market locally and bring a lawsuit that could eviscerate Prepaid assurances, she said. This does seem a worrisome prospect.
Hawaii has a healthy population largely thanks to its forward-thinking health care law. Risking undoing that, especially at a time when so much about the evolving health care system is uncertain, would not be a prudent step to take.
