- Associated Press - Wednesday, February 26, 2014

HONOLULU (AP) - The head of Hawaii’s online health insurance marketplace told state lawmakers Tuesday that it isn’t earning enough to pay its bills beyond 2014.

Tom Matsuda, the interim executive director of the Hawaii Health Connector, told the House Finance Committee that because so few people have used it, the Health Connector won’t break even after this year. About 4,500 people have enrolled in individual insurance plans since the Health Connector launched in October.

“Our projections, using the best available data, and looking at a dozen variables that affect future enrollment, mean that we’re not even close to breaking even,” Matsuda testified. “Even with substantial reductions to the estimated $15 million annual operating budget, we will not be sustainable.”

The Health Connector has asked the federal government for permission to spend its $205 million in federal grants more slowly than originally planned, Matsuda said. As scheduled, the Health Connector is supposed to go through those funds by the end of the year. An extension through 2015 would allow the Health Connector to cover its costs through 2016, Matsuda said.

The Health Connector’s board is considering leveraging its information technology platform and the contact center to provide other services, as possible ways to make more money, Matsuda said. Increasing enrollment, though, is still the goal - a challenge in Hawaii, Matsuda testified, because so many people in Hawaii already have insurance, thanks in part to the state’s Prepaid Healthcare Act.

Lawmakers are considering a bill (HB 2529) that would bring the troubled Health Connector under the state’s control, though lawmakers are wary of saddling the state with its liabilities.

The Health Connector has been beset by delays and sluggish enrollment since its launch. Documents provided to The Associated Press show that right before its launch, federal security experts considered the Health Connector a “high risk” for being hacked. In one internal email, a Centers for Medicaid and Medicaid Services security officer called Hawaii’s nascent system a “mess.”

Matsuda said in an interview that the Health Connector got up to speed and has passed continual reviews. “We could not launch or continue to operate without satisfying very stringent federal requirements relating to security,” he said.


Associated Press writer Ricardo Alonso-Zaldivar in Washington contributed to this report.

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