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Hawaii health insurance exchange

New director named to Hawaii exchange

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With the second open enrollment period set to begin  Nov. 15, Hawaii Health Connector continues to face significant challenges.

The exchange is looking to its newly named executive director, Jeffrey Kissel, to turn things around. Kissel says his first step is to gather input from stakeholders, customers and exchange officials to develop a strategic plan for the state-run exchange.

Hawaii Health Connector 2015 insurers

Hawaii Medical Service Association (HMSA) and Kaiser Permanente are again selling individual policies through Hawaii Health Connector. However, HMSA announced it will drop out of the SHOP exchange, citing excessive costs and ongoing technical issues with the exchange.

2014 enrollment hampered by malfunctioning website

Hawaii had the lowest number of QHP signups in the nation during 2014 open enrollment. Just fewer than 9,800 Hawaiians selected a qualified health plan (QHP) and about 29,000 enrolled in Medicaid. Two insurers, Hawaii Medical Service Association and Kaiser Permanente Hawaii, offered 95 plans through the marketplace for 2014 coverage. With ongoing enrollment in Medicaid and through special enrollment periods, combined enrollment in QHPs and Medicaid grew to 43,746 by mid-July.

The Connector’s eligibility system is not integrated with the state’s Medicaid system. That lack of connection caused big delays, as the enrollment process used in Hawaii requires that all consumers seeking coverage through the marketplace first be screened for Medicaid eligibility. Those deemed ineligible for Medicaid continue through the enrollment process toward selecting private health insurance. The Hawaii Office of Information Management and Technology announced a plan in July to address the bottleneck in the enrollment process. The proposal calls for creating a portal on Hawaii.gov that would route consumers to either the Medicaid system, which is called Kolea, or to Hawaii Health Connector.

Financial challenges

In addition to low enrollment, Hawaii is confronting financial concerns. Federal funding for state-run marketplaces runs out at the end of 2014. Hawaii Health Connector planned to use a 2 percent fee on premiums to fund its ongoing operations. Given low enrollment, the premium fee isn’t generating enough revenue to meet projected annual expenses of $15 million. While resolving technology and process problems will eventually lead to increased enrollment on Hawaii Health Connector, the revenue shortfall will persist unless the funding mechanism is modified because the potential market is so small.

As of July 2014, Hawaii has about 75,000 uninsured residents — about 6 percent of the population. Prior to 2014 open enrollment, the uninsured rate was about 8 percent. The state’s historically low uninsured rate is largely the result of the Hawaii Prepaid Health Care Act, which was enacted in 1974 and requires most employers to provide health insurance to employees who work more than 20 hours a week. About half of those currently uninsured are expected to qualify for Medicaid — meaning the market for the Connector is less 40,000. Marketplace officials are looking for alternative funding models as well as ways to cut expenses. The state’s request to use grant money that was awarded, but not yet spent, as bridge funding to get through 2015 was denied by the federal government.

Exchange governance

The Hawaii Health Connector is overseen by a 15-member board. Jeffrey Kissel was named as the executive director in October 2014.  While Kissel is an experienced leader, he is new to the health insurance industry. Kissel is the former president and CEO of Hawaii Gas.

Tom Matsuda served as interim executive director of the exchange from December 2013 through September 2014. Matsuda replaced Coral Andrews, who resigned.

The Hawaii House considered a bill that would have made the marketplace a state agency as a way to address the poor performance of the Connector during 2014 open enrollment. However, with some legislators worried about taking on the marketplace’s revenue problems, lawmakers eventually passed a bill that maintains the Health Connector as a nonprofit and provided $1.5 million in funding. That is much less than the $4.7 million requested.

Hawaii health insurance exchange links

Hawaii Health Connector

State Exchange Profile: Hawaii
The Henry J. Kaiser Family Foundation overview of Hawaii’s progress toward creating a state health insurance exchange.