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Hawaii exchange overview
Hawaii has a federally run health insurance marketplace with two participating carriers offering coverage (HMSA and Kaiser). During open enrollment for 2022 coverage, 21,645 Hawaii residents enrolled in private individual-market plans through the state’s exchange. Overall average premiums in Hawaii increased by 2% for 2023, before any subsidies were applied.
Frequently asked questions about Hawaii's ACA marketplace
After two years of using a technologically-troubled state-based enrollment system, Hawaii began using the HealthCare.gov enrollment platform as of the 2016 open enrollment period (more details below). The exchange was still considered a federally supported state-based marketplace at that point, and the state of Hawaii retained control over some of the exchange’s functions and provided its own Navigator funding.
But starting in November 2016, to facilitate enrollment in plans for 2017, Hawaii switched to a fully federally run exchange, although the state still oversees the plans that are sold in the exchange. In September 2016, Hawaii navigator organizations received funding from the federal government for the first time, as the state is no longer playing a role in exchange outreach. Since Hawaii had been using Healthcare.gov for enrollment since the fall of 2015, the switch to a fully federally-run exchange had minimal impact on enrollees and insurers in the exchange.
The open enrollment period for individual/family health coverage runs from November 1 to January 15 in Hawaii. Outside of open enrollment, a qualifying life event is necessary to enroll or make changes to your coverage.
Our comprehensive guides explain the details you need to know about your enrollment opportunities:
There are two insurers that offer exchange plans in Hawaii, and both offer plans statewide:
- HMSA
- Kaiser
For the third year in a row, average premium changes were very modest in Hawaii for 2023. Details about Hawaii’s individual/family rate changes for are available in SERFF and ratereview.healthcare.gov.
HMSA and Kaiser both filed a 2% average rate increase for 2023, and the rates were approved. So the overall average rate increase was 2%.
As is always the case when we talk about average rate changes, the rate changes refer to full-price premiums. People who have off-exchange plans pay full price, and so do about 17% of on-exchange enrollees in Hawaii. But for the majority of exchange enrollees who do receive premium subsidies, changes in after-subsidy premiums can be very different, depending on how much the subsidy amount itself is changing (when benchmark premiums go down, so do premium subsidy amounts, and vice versa).
We also have to keep in mind that average rate changes don’t account for the fact that premiums increase with age. Even if a particularly plan’s average rate change is 0%, an enrollee who doesn’t get premium subsidies will pay a higher rate next year simply due to the fact that they’re a year older than they were this year (for people who do get subsidies, the subsidies grow to keep pace with age-related rate increases).
For perspective, here’s a look back at how rates have changed over the years in Hawaii. The rate decreases for 2020 and 2021 came on the heels of a slight increase in 2019, but rate increases for 2016, 2017, and 2018 were much more substantial:
- For 2015, average rates in Hawaii’s individual market increased by about 7.8% (9.2% for Kaiser and 3.8% for HMSA).
- For 2016 coverage, HMSA proposed a 45.5% rate increase for their individual HMO plan, and nearly a 50% rate hike for their individual PPO plan. The following day, Kaiser proposed an 8.7% rate increase for their individual market policies. Insurance Comissioner Gordon Ito said in June 2015 that HMSA’s proposed rates would be “closely scrutinized.” Ultimately, for 2016 individual market plans, HMSA ended up with a rate increase that was smaller than requested, while Kaiser’s rates increased much more than they had projected. Across both insurers, the weighted average rate increase was 30% for 2016.
- For 2017, Hawaii’s insurers implemented another round of substantial rate increases. HMSA increased its average rate by 35%, while Kaiser increased theirs by an average of nearly 26%.
- For 2018, rates increased significantly for the third year in a row. HMSA increased its average rates by nearly 26%, and Kaiser increased theirs by more than 24%. In both cases, these rate increases were based on the assumption (which ended up being correct) that the federal government would not continue to fund cost-sharing reductions (CSR). The Hawaii Department of Insurance confirmed in early October 2017 that they had instructed the insurers to assume that CSR funding wouldn’t continue, and to apply the resulting additional premiums to on-exchange silver plans. (Hawaii has continued to take this approach ever since, with the cost of CSR added to silver plan rates in the exchange)
- For 2019: HMSA decreased their premiums slightly (by less than half a percent), while Kaiser increased theirs by almost 13%. The weighted average rate increase for 2019 was about 5.3%, as opposed to the 13.8% weighted average rate increase the insurers had proposed. The Hawaii Division of Insurance noted that the approved rates would save consumers $20 million in 2019, in comparison with what consumers would have had to pay if the initially filed rates had been approved without modification.
- For 2020, both insurers decreased their average premiums. HMSA’s average rates declined by 3.3%, and Kaiser’s average rates declined by 5.4%. HMSA had initially proposed an average decrease of 1.7%, but revised their filing in September 2019, noting that they were proposing lower rates because they had revised their assumptions regarding how much of an impact the elimination of the ACA’s individual mandate penalty was having on the morbidity of the risk pool. In other words, the risk pool wasn’t deteriorating as much as they had expected without the individual mandate penalty (details are in SERFF filing HMSA-131977825). Kaiser had initially proposed a slight rate increase, but revised it later on, noting that their risk adjustment payments were expected to be lower than they had originally anticipated.
- For 2021, both insurers again decreased their premiums. HMSA decreased average premiums by 3.1% and Kaiser decreased average premiums by 1.1%. Across both insurers, that amounts to an overall average rate decrease of about 2.4% for 2021.
- For 2022, average rates increased by 1.6%. HMSA imposed an average increase of 2.3%, while Kaiser’s average rates were unchanged from 2021. Across both insurers, that amounted to an overall average rate increase of about 1.6% for 2022.
21,645 people enrolled in private plans (QHPs) through Hawaii’s exchange during the open enrollment period for 2023 coverage. That was lower than the year before, when 22,327 people enrolled, and lower still than 2021, when 22,903 people enrolled in QHPs through Hawaii’s exchange.
Nationwide, 2023 enrollment set a substantial record high, and 2022 enrollment had also set a record high. But Hawaii was one of the few states where enrollment was lower in 2022 than it had been in 2021, and the state continued that trend in 2023.
Hawaii was, however, one of the states that bucked the overall downward trend in enrollment from 2017-2020 across states that use the federally-run exchange, and is one of the very few states where enrollment increased every year from 2014 through 2019. Here’s a summary of how enrollment (during the open enrollment period) has varied over time in Hawaii’s exchange:
- 2014: 8,592 people enrolled in private plans through Hawaii’s state-run exchange for 2014. Open enrollment lasted for six months that year (October 2013 through March 2014), and there were additional extensions tacked on at the end; that enrollment total was through April 19, 2014.
- 2015: 12,625 people enrolled through Hawaii’s state-run exchange.
- 2016: 14,564 Hawaii residents enrolled through Healthcare.gov.
- 2017: 18,938 people enrolled.
- 2018: 19,799 people enrolled.
- 2019: 20,193 people enrolled.
- 2020: 20,073 people enrolled.
- 2021: 22,903 people enrolled.
- 2022: 22,327 people enrolled.
- 2023: 21,645 people enrolled
There were very conflicting reports about Hawaii Health Connector’s total enrollment in those first two years. The executive director’s report from July 2015 showed 33,479 individuals enrolled, but that was dramatically higher than the roughly 13,000 people who were reported to have enrolled during open enrollment. And HHS was reporting only 8,200 people with effectuated coverage as of March 31, 2015.
I contacted the exchange to clear up the confusion. Then-Executive Director Jeff Kissel claimed that the larger number was much more accurate. He said that the discrepancy stemmed from a significant lag time in enrollment reporting from carriers. Kissel said that the Connector’s in-force enrollment total as of late July 2015 was roughly 20,000 people with HMSA and 11,000 people with Kaiser.
And by early September, when HHS released a report stating that Hawaii Health Connector’s effectuated enrollment as of June 30 stood at 8,802 people, Kissel said that the actual total had grown to 35,600, and that the HHS report wasn’t including HMSA enrollments.
But in November 2015, Kaiser reported that just 7,300 of their 16,800 enrollees had used Hawaii Health Connector to purchase their coverage (the remaining 9,500 people enrolled directly through Kaiser). And HMSA reported that fewer than half of their enrollments (10,000 out of 21,000 total enrollees) had come through the exchange in 2015.
These reports indicate that total enrollment was probably considerably lower than what was being reported by the exchange in 2015. In December 2015, Governor Ige noted that the state had “always had challenges getting accurate numbers from the Connector.” and explained that the discrepancies might be “one of the reasons the federal government had concerns.” Ultimately, HHS began running Hawaii’s exchange as of 2016, eliminating enrollment discrepancies from that point forward.
Three insurers currently offer dental plans through the Hawaii marketplace. Learn about dental coverage options in Hawaii.
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2018 legislation limits short-term plans and codify ACA protections into state law
The ACA’s future was uncertain in 2017, and Hawaii lawmakers passed legislation (H.B.552/Act 43) that year to create a working group tasked with recommending ways the state could preserve the ACA’s consumer protections, regardless of federal action.
The final version of the bill, signed into law by Governor David Ige in June 2017, was much less robust than earlier versions. The initial version of the bill that the House passed would have preserved some ACA provisions, regardless of what happens on the federal level (Hawaii’s legislature is overwhelmingly Democratic). The initial House version of H.B.552 would have preserved the individual mandate, minimum essential benefits requirements, dependents allowed on parents’ health plan until age 26, and the ACA’s ban on preexisting condition exclusions and gender-based premiums. That version passed the House in early March.
The Senate passed H.B.552 on April 11, but with additional amendments (SD2) that went further than what the House had proposed. The Senate’s amendments would have created a Medicaid Plus program to provide coverage to Hawaii residents with income between 138.5% and 250% of the federal poverty level, and created a trust fund to reimburse insurers for the costs of providing minimum essential insurance benefits. The Senate’s amendments also would have exempted people with household income up to 250% of the poverty level from the state’s individual mandate.
Since the two chambers had passed different bills, a conference committee then began meeting to reach an agreement, and on April 27, 2017 the House and Senate both agreed to a much less robust version of the bill. The version that was passed and signed into law denounced the federal GOP-led efforts to repeal the ACA, detailed the ways that the ACA has benefitted Hawaii, and called for the formation of a working group that would make recommendations for preserving a variety of ACA provisions, including minimum coverage requirements, essential health benefits, and Medicaid expansion.
The Affordable Health Insurance Working Group was created after the bill was signed into law, meeting in September, October, and November 2017. The working group published its report in January 2018. The report outlined a few recommended legislative proposals, which included directing the state to apply for another 1332 waiver in order to obtain federal funding for a state-based reinsurance program, as well as legislation to codify the provision that allows young adults to remain on a parent’s health insurance until age 26. The working group also recommended legislation to prohibit insurers from basing premiums on applicants’ genders or rejecting applicants with pre-existing conditions.
H.B.1520, which was signed into law in July 2018, essentially eliminated the market for short-term health insurance in Hawaii. The legislation stipulates that a short-term plan can’t be more than 90 days, and it prohibits an insurer from selling (or renewing) a short-term policy to anyone who was eligible to purchase coverage in the exchange during the previous calendar year, either during open enrollment or a special enrollment period.
Virtually everyone in Hawaii is eligible to purchase coverage in the exchange. The only exceptions are people who aren’t legal US residents, people who are enrolled in Medicare, and people who are incarcerated. So now that H.B.1520 has been enacted, there are very few people to whom short-term insurers can market their plans. By early October 2018, there was still at least one insurer offering short-term plans in Hawaii. But those plans were no longer for sale as of late October 2018, and no other short-term plans have been introduced into the state’s market since then.
S.B.2340, which was signed into law in July 2018, codified three of the ACA’s consumer protections into state law. The legislation:
- Ensures that young adults can continue to remain on their parents’ health insurance plans until age 26
- Prohibits insurers from using applicants’ gender to set premiums
- Prohibits insurers from rejecting an application based on an applicant’s medical history, or imposing coverage exclusions based on pre-existing conditions.
The purpose of this legislation was to ensure that these ACA provisions remain in effect in Hawaii, regardless of any potential changes to the ACA at the federal level. Hawaii lawmakers wanted to ensure that at least some of the ACA’s most popular provisions will continue to be the law in Hawaii, regardless of potential changes at the federal level.
H.B.2146 and S.B.2199, which did not pass, would have directed the state to submit a 1332 waiver to the federal government, in order to obtain federal funding for a reinsurance program in Hawaii. The idea is that certain high-cost claims would be covered by the reinsurance program, thus reducing premiums for everyone in the individual market. Lower premiums mean lower premium subsidies, and the 1332 waiver would be used so that the money the federal government saves on premium subsidies would be sent to Hawaii for the state to fund the reinsurance program.
Several other states have implemented reinsurance programs, and have seen significant stabilization in their individual markets as a result. But several other states have opted against reinsurance programs, generally due to concerns about how to fund the state’s portion of the cost. And there is less use for reinsurance programs since 2021, due to the American Rescue Plan’s elimination of the “subsidy cliff.” That provision has been extended through 2025 by the Inflation Reduction Act.
Hawaii was the first state in the country to receive federal approval of a 1332 waiver, which allowed them to end their SHOP exchange for small businesses (explained below). H.B.2146/S.B.2199 called for a second 1332 waiver, devoted to obtaining federal funding for reinsurance. Ultimately, however, the legislation did not advance during the 2018 session.
S.B.2924 and H.B.2209, which did not pass, would have created an individual mandate in Hawaii, effective in 2019. The ACA’s individual mandate penalty is $0 in 2019 and beyond, essentially eliminating the individual mandate (the federal mandate technically remains in effect, but there is no longer any associated penalty, so there is no method for enforcing the mandate). S.B.2924 passed the Senate by a vote of 24-1 in March 2018, but did not advance in the House Finance Committee.
As of 2017, Hawaii no longer has a SHOP exchange for small businesses. The State Department of Labor and Industrial Relations has an FAQ page about this.
In September 2015, Hawaii became the first state to post a draft 1332 innovation waiver. In June 2016, the state officially submitted its 1332 waiver proposal. In response to a July request from HHS for more details, Hawaii submitted a revised 1332 waiver proposal in August 2016, and requested approval from HHS in time for the waiver to become effective for 2017.
In late September 2016, HHS acknowledged receipt of a complete 1332 waiver from Hawaii, and noted that the federal government would make a decision within 180 days (no later than March 25, 2017).
On December 30, CMS sent a letter to Hawaii Governor, David Ige, informing him that the 1332 waiver had been approved for five years, effective January 1, 2017, through December 31, 2021. The only portion of the waiver proposal that wasn’t approved was a provision that would have allowed agencies other than the Hawaii Medicaid Agency to have a role in the exchange; CMS noted that this was no longer applicable, since HealthCare.gov runs the exchange in Hawaii now.
Hawaii’s waiver aligns the ACA with the state’s existing Prepaid Health Care Act. Under the Prepaid Healthcare Act, employees who work at least 20 hours a week have to be offered employer-sponsored health insurance, and can’t be asked to pay more than 1.5% of their wages for employee-only coverage (as opposed to 9.12% under the ACA in 2023). And unlike the ACA’s employer mandate (which only applies to businesses with 50 or more workers), the Prepaid Health Care Act applies to all businesses, regardless of how few employees they have. In its 1332 waiver proposal, Hawaii “proposes to waive provisions in Sections 1301, 1304, 1311, and 1312 of the Affordable Care Act that enumerate marketplace requirements that conflict with Prepaid.”
Hawaii’s 1332 waiver proposal “is primarily focused on waiving the need to establish and maintain a state-based SHOP exchange or participate in a federal SHOP exchange.” The state sought to avoid the ACA’s SHOP exchange requirements, since they already have an employer-sponsored insurance system that they believe is more effective and affordable for employers than the ACA’s SHOP exchange. They also note that Hawaii cannot use the federally-facilitated SHOP exchange on HealthCare.gov, because it “does not inform Hawai‘i employers of their Prepaid-specific obligations and options.“
Enrollment in SHOP was very low in Hawaii (as was the case in most states). Hawaii notes that only about 1,000 employees had coverage through the state’s SHOP exchange as of June 2016, while 742,000 had coverage under Hawaii’s Prepaid Health Care Act. And only one of the state’s four group insurance carriers offered plans through SHOP in 2016. The state-run SHOP exchange shut down in June 2015 as part of the transition to a federally-supported state-based marketplace, and small businesses had just been enrolling directly through Kaiser (the only carrier that participated in SHOP) since then (HMSA had offered SHOP coverage in 2014, but announced in August 2014 that they would not be offering small business plans through the Connector starting in 2015, due mainly to the technological problems with the exchange. That left Kaiser as the only small business option on the Connector as of 2015).
Under the approved 1332 waiver, Hawaii businesses can no longer participate in SHOP for plan years that begin on or after January 1, 2017, but plans that started in 2016 could continue through their renewal date in 2017. The ACA’s small business tax credit is not available in Hawaii for plan years that begin on or after January 1, 2017, but CMS will give the money they would have spent on the small business tax credit to the state, and they can use it to implement the 1332 waiver, including payments to small employers who are eligible for the state’s Premium Supplementation Program.
The initial waiver was for five years, through the end of 2021. Hawaii applied for a five-year extension in the spring of 2021, and CMS approved it in late 2021, extending the state’s waiver through 2026.
Subsidy eligibility for COFA nation residents
With the exception of Hawaii, the rest of the states have very few QHP enrollees with income below the poverty level. In states that have expanded Medicaid, residents with income below the poverty level are eligible for Medicaid. And in states that haven’t expanded Medicaid, residents with income below the poverty level are stuck in the coverage gap, and very few can afford to pay full price for health insurance through the exchange (no subsidies are available to people in the coverage gap).
In every state, people who would be eligible for Medicaid based on income, but aren’t eligible because of immigration requirements (ie, they haven’t been in the US for at least five years) are eligible for premium subsidies in the exchange. If their income is less than the poverty level, they’re eligible for subsidies as if their income were 100% of the poverty level. By and large, this is why most states’ exchanges have somewhere between 1% and 4% of their enrollees with income under the poverty level (although it also includes some people in the coverage gap who have purchased full-price coverage, and some people who would have been eligible for Medicaid but have opted instead to pay full price for a QHP in the exchange).
But in Hawaii, nearly a third (29%) of the people who enrolled in QHPs through the exchange had income below the poverty level as of 2016. That’s because COFA nation residents are eligible for premium subsidies in the exchange even if their income is below the poverty level. They used to be eligible for state-funded Medicaid, but they’ve been transitioned to premium subsidies in the exchange instead; federal Medicaid expansion won’t cover COFA nation residents, but they are eligible for premium subsidies (Andrew Sprung has a nice explanation of how this all works).
Hawaii exchange was troubled from the start
In addition to administrative and technical problems, Hawaii Health Connector faced financial challenges, mostly because of relatively low enrollment and a small pool of eligible enrollees. Marketplace officials spent much of 2014 looking for alternative funding models as well as ways to cut expenses. Federal funding for state-run marketplace operations ran out at the end of 2014. The state allocated $1.5 million of a $4 million request to fund exchange operations through June 2015, the end of the fiscal year.
Hawaii Health Connector planned to use a 2 percent fee on premiums to fund its ongoing operations. Given low enrollment, the premium fee wasn’t generating enough revenue to meet annual expenses, estimated at anywhere between $4.5 and $15 million, according to the Associated Press.
The Hawaii Senate in 2015 approved a bill that would have allowed Hawaii Health Connector to issue up to $28 million in state bonds over ten years to fund its operations until it became self-supporting. However, a House committee stripped the bonding provision from the bill.
In January 2015, Executive Director Jeffrey Kissel (who took over the exchange in October 2014) acknowledged “deficiencies in the planning process, procurement, and governance” following the release of a highly critical state audit. The audit found inadequate planning by the Connector’s board of directors led to an unsustainable health exchange, and improper procurement processes, contract administration, and financial oversight put federal grants at risk.
The Connector’s eligibility system was not integrated with the state’s Medicaid system, which caused significant enrollment delays and was another reason the exchange wasn’t compliant with federal regulations.
Another major problem with Hawaii Health Connector was the lack of anonymous browsing — consumers had to create an account before they could compare plans. That same design flaw was a major source of congestion and frustration with the original version of HealthCare.gov (the federal marketplace was soon revamped to allow browsing).
In May 2015, the Hawaii legislature approved just $2 million in funding for Hawaii Health Connector — a far cry from the $10 million the exchange had requested. Lawmakers have been considering up to $5.4 million for the exchange, but ultimately approved less than half that amount (SB 1028 is the legislation that granted the $2 million).
HHS notified the state in March 2015 that Hawaii Health Connector wasn’t complying with the requirement that it be financially self-sustaining as of January 2015. As a result, the federal government began preparations for a possible transition to Healthcare.gov, and the remaining $70 million in federal funding for the exchange was frozen ($204 million had been allocated to the Hawaii Health Connector; $130 million had already been spent by the time the federal government notified the exchange that a switch to Healthcare.gov would likely be necessary).
In June 2015, the Hawaii Health Connector Board approved a plan to transition to Healthcare.gov by October, in time for the 2016 open enrollment period that began November 1, 2015. The exchange became a federally-supported state-based model, with HealthCare.gov handling enrollment, while the state continued to oversee customer service and outreach. But for 2017, Hawaii transitioned to having a fully-federally-run exchange.
Initially, the exchange was slated to cease its operations by September 2015. But in late August, the Connector reached an agreement with the state and federal governments to allow them to continue to provide outreach and enrollment assistance during the 2016 open enrollment, with the state paying roughly $3.3 million, and the federal government contributing $2.8 million. With this funding, it was expected that the Connector would remain operational for outreach activities through October 2016, with enrollments conducted through Healthcare.gov.
But on November 19, 2015 (after open enrollment for 2016 was already underway), amid concerns that the exchange had run out of money, the exchange’s executive committee voted to recommend that Hawaii Health Connector speed up the transition of remaining exchange functions to the state of Hawaii. In a press release regarding the move to shutter the exchange sooner than anticipated, Governor Ige noted that “the Connector’s ongoing financial challenges have forced the state to accelerate the transition beginning December 1, 2015.”
The 22 remaining employees, as well as 20 temporary staff who had been assisting the exchange, were laid off by December 4, and the five private board members resigned at the end of 2015.
As a result of the abrupt shut-down of Hawaii Health Connector, the state worked out a contract with local IT company ike/DataHouse, to ensure that Forms 1095-A were processed and mailed to enrollees and the IRS for 2015. The forms were mailed in January 2016, but up to 80 percent of them contained errors, and the state was working to get corrected forms generated and mailed as of mid-March 2016.
In February 2016, Hawaii Attorney General Douglas Chin filed a request to dissolve the Hawaii Health Connector and have the court appoint a receiver for “the remaining charitable assets of the exchange.” Chin noted that the dissolution process would reveal what assets remained, but he also said that the exchange’s assets were being “misapplied or wasted.”
Hawaii health insurance exchange links
State Exchange Profile: Hawaii (from the Henry J. Kaiser Family Foundation)
Hawaii Department of Insurance
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
Other types of health coverage in Hawaii
Short-term health insurance is not currently being marketed in Hawaii. Learn about state short-term regulation.
Hawaii regulations ensure that Medicare beneficiaries under age 65 can purchase Medigap plans.
Find affordable individual and family plans, small-group, short-term or Medicare plans.
Learn about programs that provide financial help to Hawaii Medicare enrollees – including Medicare Savings Programs and Medicaid.
Learn about adult and pediatric dental insurance options in Hawaii, including stand-alone dental and coverage through the Hawaii marketplace.