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Hawaii health insurance exchange

'Aloha State' has lowest QHP sign-ups in nation, despite top health ranking

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The open enrollment period to purchase health insurance for 2014 through Hawaii Health Connector, Hawaii’s state-run health insurance marketplace, has ended. People who get married or divorced, change jobs, have a child or experience another qualifying event may be eligible for a special enrollment period. Enrollment for MedQuest, Hawaii’s Medicaid program and Children’s Health Insurance Program (CHIP), continues throughout the year. Individuals who don’t have health insurance that provides “minimum essential coverage” may have to pay a penalty: $95 or one percent of income, whichever is greater.

Open enrollment for 2015 coverage through the marketplace begins Nov. 15.

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.

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.

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.

The Hawaii Health Connector is overseen by a 15-member board. Tom Matsuda was named interim executive director of the exchange in December 2013. Matsuda replaced Coral Andrews, who resigned. The Connector board is conducting a search for a permanent director who they hope to have in place by October.

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.