- Associated Press - Friday, March 14, 2014

HONOLULU (AP) - Hawaii lawmakers questioned the head of Hawaii’s health insurance exchange Friday about how the agency plans to support itself financially, saying the state will consider giving the nonprofit money from its general fund if it can’t come up with a plan to sustain itself.

Lawmakers also have suggested the state insurance commission could levy special sustainability fees on insurance companies that are not participating in the Hawaii Health Connector.

“If the fee does not become a mechanism that we can sustain this Connector with, we are actually looking at the possibility of a general fund appropriation, so that’s a new piece that’s being introduced into this,” said Rep. Della Au Belatti, chairwoman of the House Health Committee. “That’s why it’s so important that we get that information from the Connector about precisely what is needed for operations.”

The Hawaii exchange has had problems from its start, including software problems and a delay in open enrollment that led some people to skip the exchange altogether and buy plans directly from insurance companies in anticipation of a March 31 coverage deadline under President Barack Obama’s federal health care overhaul.

Connector officials said just under 5,000 people had bought individual insurance through the exchange as of March 8.

Rep. Angus McKelvey, chairman of the Consumer Protection and Commerce Committee, asked whether it would be a good idea to shut down the Hawaii Health Connector entirely and to allow the federal government to come in and set up its own exchange.

That would cause more chaos and wouldn’t solve the problem, Hawaii Attorney General David Louie said. Hawaii has its own law that requires better health insurance options than what federal law requires, so a federal system might come up short, he said.

“If the Connector goes away, and then the compliance with the Affordable Care Act defaults to a federal connector, that would have the effect of tending to undermine the Hawaii Prepaid Health Care law,” Louie said.

The Hawaii Health Connector intends to provide the Legislature with a plan to reduce costs within the next two to three weeks, said Tom Matsuda, interim executive director.

“Our board will strike the right balance between cost-cutting and complying with federal and state laws, and protecting the most important services,” Matsuda said.

Right now, the Connector is funded through federal grants and the limited revenue generated by a 2 percent fee, Matsuda said.

“The only choice we have is to drastically reduce our expenses, which means we have to drastically reduce the services we offer,” Matsuda said. “We’re stuck between a rock and a hard place.”

The exchange was established with $205 million in federal grants, and it is supposed to spend those funds by the end of the year. It has asked the federal government to spend the money more slowly than originally planned.

A Senate bill (SB 2470) suggesting changes to the Health Connector was heard by a joint House committee Friday. It calls for greater transparency and oversight of the health insurance exchange and changes to its board of directors. The House committees proposed amendments to the Senate bill, suggesting a new sustainability fund for the exchange, which would include fees collected from insurers not participating in the exchange and any funds any from the Legislature.

Belatti deferred action on the bill until Monday.


Cathy Bussewitz can be reached on Twitter at https://twitter.com/cbussewitz

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