A key Senate committee approved Friday Gov. Neil Abercrombie’s controversial board appointees to Hawaii’s first health insurance exchange designed to provide residents access to affordable medical coverage.

The Senate Commerce and Consumer Protection Committee voted to recommend a full Senate confirmation of 11 members to a board overseeing the design of the exchange, a key element of the Obama administration’s Affordable Care Act. A Senate confirmation floor vote could be held as early as Monday.

The board’s composition has raised red flags with consumer advocates fearful that insurance company executive appointees will compromise the first major piece of federal health care reform in Hawaii because they stand to gain financially from decisions of the exchange, known as the Hawaii Health Connector.

The move comes as an amended bill seeking to immediately exclude health insurers and providers from the board makes its way through the House. Senate Bill 2434 is set to be heard by the House Finance Committee, though a hearing date hasn’t yet been scheduled.

Consumer groups, opposed to board representatives from Hawaii Medical Service Association, Kaiser Permanente Hawaii and Hawaii Dental Service, rallied immediately before the confirmation hearing Friday morning to "oppose nominees who have a financial conflict of interest," according to AARP.

"Composition of the board is significant, because the health insurance exchange will enable coverage to as many as 100,000 Hawaii residents who are currently without insurance," AARP said in a release announcing the protest. "That represents a new market valued at an estimated $300 million."

The bill also would apply to the Hawaii Primary Care Association and the Maui Medical Group as well as a vacant position stemming from the resignation of an Ohana Health Plan representative, potentially leaving Abercrombie to replace six of his 11 appointees. The organizations could remain as nonvoting members in an advisory capacity.

The federal Affordable Care Act, signed into law by President Barack Obama in March 2010, requires all states to set up a health insurance exchange that will match uninsured individuals to subsidized health care plans.

"They are putting health plans on the Connector board where they will be part of developing the benefit plans, and nobody’s going to be able to compete against them," said Bev Harbin, a former state representative and executive director of the Rights of Consumer Consortium based on Hawaii island. "It’ll deter competition because these plans (HMSA and Kaiser) have over 60 percent of the population already insured."

Rosalyn Baker, chairwoman of the Senate Commerce and Consumer Protection Committee, said the governor’s nominations must be approved this session and that the "likelihood we would come to some sort of agreement on the bill in time for us to act on this is not great."

"People on the board are individuals of integrity that have the capacity to recuse themselves if there is any conflict," Baker said, adding that federal law mandates financial disclosure and transparency, which will be standard operating procedure for the exchange. "People on the board would be certainly willing to call others out if there was (a conflict). There’s checks and balances. We will be taking a look over everybody’s shoulder."