hawaii guide to health insurance

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Hawaii health insurance exchange

3,500 enroll on HI Health Connector

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Hawaii Health Connector, the state-run health insurance exchange established through Affordable Care Act (ACA), continues to face significant challenges during the second open enrollment period — including financial problems and a website with ongoing technical issues.

Open enrollment for 2015 began Nov. 15, 2014, and continues until Feb. 15, 2015. As of Dec. 15, about 3,500 people signed up for 2015 coverage through Hawaii Health Connector.

As have many other state-run exchanges, Hawaii Health Connector has extended the deadline to purchase coverage that goes into effect Jan. 1. Residents now have up until noon, Dec. 31, to purchase coverage that starts at the beginning of the New Year.

Hawaii Health Connector 2015 insurers

Hawaii Medical Service Association (HMSA) and Kaiser Permanente are again selling individual policies through Hawaii Health Connector for the 2015 plan year. However, HMSA announced it will drop out of the SHOP exchange effective Jan. 1, 2015. HMSA cited excessive costs and ongoing technical issues with the exchange. About 300 small businesses and 660 employees and their families are affected.

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.

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.

Another problem with Hawaii Health Connector is that it does not allow anonymous browsing. Consumers must create an account before they can compare plans. That same design flaw was a major source of congestion and frustration with the original version of HealthCare.gov, the federal marketplace. HealthCare.gov was revamped to allow browsing, and Hawaii Health Connector officials hope to make the feature available on the state exchange at some point.

Financial challenges

In addition to technical problems, Hawaii Health Connector 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 annual expenses, estimated at anywhere between $4.5 and $15 million, according to the Associated Press. While resolving technology and process problems will eventually make it easier to enroll through 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 had about 75,000 uninsured residents — about 6 percent of the population. About half of those currently uninsured are expected to qualify for Medicaid — meaning the market for the Connector is less than 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 spent, as bridge funding to get through 2015 was denied by the federal government.

The state allocated $1.5 million of a $4 million request to fund Hawaii Health Connector operations through June 2015, the end of the fiscal year. That leaves the Connector with a $2.5 million gap. Connector officials will seek additional state funding during the 2015 session.

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 continues the Health Connector as a nonprofit.

ACA presents unique challenge for Hawaii

Many of the concerns that prompted national health care reform and the 2010 passage of the Affordable Care Act are not prominent in Hawaii. Some experts have even raised concerns that the Affordable Care Act is a threat to the quality of health insurance coverage in Hawaii. Hawaii enjoys a low uninsured rate, health insurance plans must cover a core set of benefits, and employer-provided coverage is quite affordable.

This good state of affairs is largely due to the Hawaii Prepaid Health Care Act, which was enacted in 1974. The Prepaid Health Care Act requires employers to provide health insurance to employees who work more than 20 hours a week and to pay 50 percent of premiums. “Affordability” for employees is defined as 1.5 percent of income, compared to 9.5 percent under the ACA.

Given Hawaii’s relatively small population and its historically low uninsured rate, implementing a state-run exchange was a questionable financial decision. According to Kaiser Health News, the Hawaii Health Connector was the nation’s most expensive exchange on a per-enrollee basis: $23,899 per 2014 enrollee. As noted above, the small overall market means it is unlikely the Health Connector can fund its ongoing operating costs solely with a premiums tax and will need ongoing allocations from the state.

Hawaii health insurance exchange links

Hawaii Health Connector
877-628-5076

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