It was intended to be the grand unveiling of the new online platform for buying the products of health care reform — new insurance policies — but 2013 hasn’t played out as planned.
With the convening of the 2014 Legislature a few weeks away, turning things around with the Hawaii Health Connector with significant structural reform is critical, changes that should draw the exchange within closer control of state regulators.
The Connector, the Web portal for a state that supposedly had a leg up where access to care is concerned, suffered from the same technical flaws as its federal counterpart, healthcare.gov. The health care confusion across the country deepened further in recent days, with an eleventh-hour "hardship exemption" being offered to those whose substandard policies had been canceled.
Locally, the Connector website has improved to a point, but now with tomorrow’s enrollment deadline hanging threateningly overhead, a mad scramble to get enrollees covered by Jan. 1 is in full swing.
Although more navigable, the site still had enrolled only 960 in the individual market as of Dec. 14. Tom Matsuda, interim executive director of the exchange, said there was a glitch interfering in the transfer of data between the state’s Medicaid system and the Connector, which meant appli- cants seeking a subsidy often encountered a barrier.
The state Legislature, however, has little to do directly with the website problems, which certainly will resolve, if somewhat chaotically. The question that ought to confront Hawaii policymakers: Is this the best model for delivering health coverage to citizens?
The health insurance exchange was created by the 2011 Legislature as a private nonprofit entity that would receive initial federal grants and then transition to a self-sufficient financial plan, underwritten through fees paid by insurers on each plan sold.
At the time, the nonprofit model made theoretical sense, in keeping with a state budget that strained to cover the costs of public services. However, in practice the setup hasn’t enabled operations that were sufficiently transparent or even that efficient.
The disappointing performance of the exchange is Exhibit A in the case for radically restructuring the exchange.
Even more important, making the exchange sustainable will require a more streamlined operation. After all, some $204.3 million in federal grants now funding Hawaii’s Affordable Care Act foray will be expiring by the end of next year.
At a recent legislative briefing, Matsuda said the Connector needs to sign up 50,000 people — 10,000 individuals and 40,000 small-business workers — by June 30 to be financially sustainable after its grants run out. Lawmakers said they plan to introduce bills to change the governance of the Connector to that of a state agency.
Critics have charged that the nonprofit was not subject to state sunshine laws, and that the lack of transparency concealed problems from the state and the taxpayers who ultimately would foot the bills.
In addition, the current structure was faulted because representatives of the insurance agencies sit as voting members of its governing board, an arrangement that clearly presents conflicts of interest. It would be wise for legislators to correct that governance error — insurers can serve in an advisory capacity.
But simply reconstituting the Connector as a state agency would not solve the sustainability problem. The Connector functions by directing applicants to programs for which they qualify, whether it be Medicaid or the subsidies that were authorized under the federal Affordable Care Act.
It would make sense to consolidate these functions, either within the Department of Human Services or the Department of Health. The Connector ought to become not a separate agency but a division within an existing state office. The exchanges may be in a difficult period now, but as they become established they should occupy a more modest niche within state government, rather than prompting the creation of a whole new bureaucracy.
The Connector has been operating with more than $200 million in federal grants that will be gone after next year. That’s an enormous sum of money, and whether that spending level was really necessary is certainly debatable.
But at the very least the duty of state leadership must be to rethink the whole enterprise now, and provide the structure that would enable a smoothly functioning health exchange, one that’s accountable to the public and truly affordable for the long term.