- Associated Press - Wednesday, April 9, 2014

HONOLULU (AP) - The head of the Hawaii Health Connector told a panel of lawmakers Wednesday that the troubled health exchange will need $4.7 million to be financially sustainable next year.

Tom Matsuda, interim executive director of the Connector, gave the figure at a legislative hearing Wednesday. The exchange’s board spent the weekend analyzing its budget and coming up with a sustainability plan, making cuts to salaries, benefits, outreach and public relations, he said.

“We have made fairly deep cuts in all of those areas where we could cut,” Matsuda said.

In 2016, the Connector anticipates a shortfall of $8.9 million, according to preliminary budget projections it submitted to the Legislature. The Legislature is considering propping up the Connector, either through a fee on all insurers or through an appropriation from the general fund.

Acting State Auditor Jan Yamane, who presented preliminary results from an audit of the exchange, said the Connector had spent $55.5 million by the end of 2013. The Connector spent about $35 million on information technology contracts, including software and licensing, through the end of 2013, according to Yamane’s preliminary numbers. Most of that, nearly $22 million, went to the contractor CGI. The exchange also paid about $8 million to Mansha, $3.7 million to PCG and $1.2 million to Turning Point, according to the preliminary audit report.

The board did not make cuts to existing contracts in its plan, Matsuda said.

“What we want to do is negotiate with our vendors to see if we can reduce those costs,” Matsuda said. “It’s clear that if we don’t, we’re not going to be able to survive.”

Yamane said her office anticipates delivering a full audit report in late fall.

Rep. Della Au Bellati, D-Honolulu, said it’s urgent that government representatives weigh in as the Legislature considers financial support to the exchange. The Legislature is demanding more transparency and changes to the Connector’s board, she said. The Connector has been criticized for having insurance companies on its board.

“Is the board going to take up the reforms?” Au Bellati asked Sherry Menor-McNamara, chairwoman of the Connector’s Board of Directors and senior vice president of the Chamber of Commerce. McNamara said the board understands the concerns, but thinks it may be a bad time to change its composition.

“To completely change everything during a critical junction in this process, we feel that it could provide unintentional consequences,” Menor-McNamara said.

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