- Associated Press - Friday, April 25, 2014

HONOLULU (AP) - A key committee in the Hawaii Legislature approved a proposal to give $1.5 million to the state’s troubled health exchange, but the funding amount was well below the $4.7 million that officials from the Hawaii Health Connector had recently asked for.

Tom Matsuda, who leads the Hawaii Health Connector, said the exchange will survive. But he did not have an immediate answer to how it would reduce spending to that level.

“We just heard this decision, so we have to do some planning,” Matsuda said after the hearing. “Ultimately, it’s the board’s decision.”

Sen. Rosalyn Baker, chairwoman on the Senate side of the conference committee that advanced the bill, said the amount was not what she was hoping for, but the Legislature is dealing with a budget crunch and has a lot of programs to fund.

“I think we’ve got a very good bill,” Baker said. “I’m disappointed that we don’t have more money in it. I think it means we’re going to have to come back, because you can only squeeze so much blood out of a turnip.”

The $1.5 million still has to be approved by the full House and Senate. It would help the Connector fund its operations for six months starting next January. Matsuda had projected that the Connector would have a $4.7 million deficit during those six months, after the timeline to spend federal funds expired. The budget shortfall in 2016 was estimated to be $8.9 million, Matsuda recently told the Legislature.

The Connector will work with its contractors to try to reduce some of its expenses, Baker said.

“It’s a good thing they don’t need the money until January, because the Legislature will be sitting again and if things change, they will be able to address it then,” Baker said.

House members had previously proposed charging a fee to all insurers to prop up the exchange, but that proposal died, leaving lawmakers with the option of spending money out of the general fund.

“There was no political support for any fee,” said Rep. Angus McKelvey, co-chairman of the conference committee.

A draft of the bill distributed to lawmakers Friday morning and obtained by The Associated Press shows that as recently as this morning, the funding level was set to go as high as $3.7 million.

McKelvey said the funding amount was reduced because he was pushing for a reduced spending, and focusing on cuts to the Connector’s outreach budget.

Lawmakers also are working to increase oversight of the organization, which was awarded more than $200 million in federal grants, but signed up only about 8,000 people in its first six months. The bill calls for a legislative oversight committee that would review an annual sustainability plan from the Connector.

Under the proposal, the board of directors of the Connector would be changed gradually so that eventually, there would be no insurance companies on the board.

Members of the House wanted to replace the board of directors entirely. But Connector board members said in legislative hearings that wiping out the board would make it difficult to continue their work.

Senators suggested phasing in board changes gradually, so that institutional knowledge wasn’t totally lost, McKelvey said. “They didn’t want the board to be wiped out overnight,” he said.

The bill will likely be voted on next week by the full House and Senate.

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