The Hawaii Health Connector website was launched — if that term can even be used for what happened — on the official Oct. 1 start date amid criticism that the online insurance marketplace was hopelessly botched, from the technical standpoint. People were unable to log on or get through the process, and even now confidence is not high that enrollments are being processed correctly.
Last week’s candid presentation by the agency’s interim executive director, Tom Matsuda, laid bare an even more fundamental problem with the whole setup. Matsuda made official what many people long suspected: There is simply no way this private nonprofit can stay afloat financially without a major bailout by Hawaii taxpayers.
And that should not be allowed by state lawmakers, because it would merely be throwing good money after bad. That, Matsuda told legislators, is because Hawaii has a far lower percentage of people lacking health insurance than most other states. That’s an excellent condition, all thanks to our Prepaid Health Care Act.
As a result, he said, the islands simply lack the market of potential customers to make the Connector agency sustainable as it was originally planned, through small fees assessed on each enrollment processed through the exchange. And with only 4,467 people signed up, the revenue shortfall can’t be overcome.
The state Senate’s proposal, which would financially float the agency by assessing a fee on all insurance holders statewide, should be summarily rejected at the state Capitol. The problem with exchang-es in states that aren’t well served by them is one the federal government will have to solve.
And Hawaii’s congressional delegation had better get busy and see that it does. There are a few strategies they should pursue:
» Connector leaders seem hopeful that federal authorities will allow unspent grant money to be redirected to cover costs of running the agency beyond the end of this year. That’s when the startup, operational grants run out.
The Connector received more than $204 million in federal grants, much of which was intended to pay the information technology bills for setting up the website. About half of that is left, and congressional delegates need to push the Obama administration to extend the grants’ expiration date, to buy a year’s time to allow the Connector to wind down or transform.
» Hawaii’s senators and representatives should start networking with other states struggling with insurance exchanges. Together they should push hard for an amendment that would allow a limited opt-out as soon as possible.
The Affordable Care Act (ACA) does include a provision for state waivers, but those don’t become an option before 2017. This date needs to be pushed up as early as possible. Even if the federal funds can be used past this year, Hawaii can’t keep this agency running as is beyond 2015.
» Whether Hawaii needs an exchange at all is in doubt, and congressional leaders need to collaborate with state lawmakers on ways to shrink the whole Connector footprint.
A revelation on Thursday makes this discussion pertinent. The ACA was designed to make insurance discounts available only on policies purchased through online exchanges, such as the Connector. However, the Obama administration last week quietly issued a fix by announcing that in states that have experienced technical problems with the websites, some consumers can get the discounts on plans purchased outside the exchange.
This is essentially an admission that elaborate online exchanges haven’t worked in many places — like Hawaii — and ultimately may not be needed at all. A simplified version of the Connector website, one that provides some information but relays shoppers to the carriers for purchasing, would certainly suffice.
And it’s unlikely that a full-scale agency with a governing board will be needed to run something like that. An arm of an existing state agency could handle any consumer queries and provide support for the ongoing coverage programs.
The Connector is run by a private nonprofit, so state lawmakers wouldn’t be able to dismantle it through legislation. Without a revenue stream, though, the agency surely would decide to disband on its own.
In any case, the Connector’s survival even for the short term is the problem of the federal government. The Legislature must not turn it into a state problem, a bottomless money pit that Hawaii taxpayers will have to fill, year after year.
