A new year for Obamacare

The high court has ruled, the president has been reelected and Hawaii is awaiting acceptance of its plan under the federal Affordable Care Act ahead of most other states.

"We’re moving at a very past pace, based on the deadlines that the federal government has laid out in front of us," said Coral Andrews, executive director of the Hawaii Health Connector, which was created to gear up for completion of the national health care overhaul by the end of next year.

To that end, Hawaii took a huge step forward less than two weeks ago when it awarded a four-year, $53 million contract to CGI Technologies and Solutions Inc., of Fairfax, Va., to build and maintain the state’s health insurance exchange. The money is part of a $61.8 million federal grant that came in August to pay for the health initiative.

Hawaii was the first state to declare its decision as early as June to develop a state-based insurance exchange, rather than a state-federal partnership or an entirely federal system. For Hawaii’s exchange, CGI will develop and maintain eligibility, enrollment, plan management, consumer support and other processes over the next three years with options for extensions.

On Nov. 14, Andrews forwarded Hawaii’s "blueprint" application to the U.S. Department of Health and Human Services, meeting the deadline that numerous other states missed. The White House extended the deadline to last Friday as more than a dozen states flirted with turning over their health care systems to the federal government. The Obama administration has promised to give them flexibility in how to define and run the exchanges.

Andrews said it was obvious that some states "had held back waiting to see first what was going to happen with the (U.S.) Supreme Court decision (upholding the law in June), and secondarily, with the presidential election."

"For those that are already utilizing the (Hawaii) Prepaid Health Care Act, it won’t feel very different for them on the small-business side of the exchange," Andrews said.

Since 2010, numerous provisions of the federal law have taken effect, including closing of the Medicare "donut hole" in prescription benefits, maintaining coverage of those with pre-existing conditions and allowing dependent children to remain on their parents’ plan up to age 26.

Because of its existing health care mandate, Hawaii has one of the lowest percentages of children notcovered by insurance. A recent study found that only 3.6 percent of Hawaii’s children were uninsured in 2011, fourth lowest in the country; however, it was the only state since 2009 to record a significant increase in uninsured children, up 55 percent to 10,980.

"Because we’ve had the Prepaid Health Care in place, we’ve historically had low numbers of uninsured compared with the rest of the country," said George Greene, president and CEO of the Healthcare Association of Hawaii. "In some states the uninsured has been as high as 20-25 percent. Historically, our uninsured rate has been about 6-7 percent, so we’ve got a much smaller gap to close."

If the U.S. Department of Health and Human Services approves Hawaii’s plan, as expected, it will go into effect on Oct. 1, 2013. By the end of next year, those who can afford health insurance but refuse to buy will be fined — $95 in 2014, $325 in 2015, and $695 in 2016. The mandate exempts people of certain religions or if the lowest-cost plan exceeds 8 percent of income, according to the Kaiser Family Foundation.

That provision will not be as severe in Hawaii as in most other states because of its 1974 health care law, which has resulted in 92.3 percent, or 885,000, of the state’s population being covered by insurance through an employer mandate, while 97,000 are uninsured. That coverage is second only to Massachusetts, where the individual mandate has resulted in 94.4 percent coverage.

One change that must occur in Hawaii, according to the federal plan, will be the addition of at least two national health insurance plans, Andrews said. Whether those plans will come to Hawaii in large numbers is doubtful, although Andrews said her office has received calls from health plans on the mainland that have no presence in Hawaii but sought information about participating here.

"Ostensibly, you’re going to have more insurance organizations enter the (Hawaii) market, which could, in fact, benefit providers in the fact that you’re going to have more competition," Greene said. "More competition generally drives down prices, and in our case that would be premiums."

That would make Hawaii’s relatively mild rise in health care prices even lower. Kaiser Permanente and Hawaii Medical Service Association, which control more than 90 percent of the insurance market here, have raised the average premium from 2001 through 2010 by 72 percent, compared with an overall 135 percent nationwide. It rose by nearly 140 percent in Virginia, where the two largest insurers controlled only one-fourth of the market.

How many other insurers will enter Hawaii remains to be seen, predicated on whether they would operate effectively from afar — the mainland.

"If they don’t, then the question becomes one, from my perspective, of service," Greene said. "They can get into contracts with providers but, if you are a patient, do you want to have to make a phone call back to the mainland if there’s no office here in order to handle any issues that might arise with your insurance?"

In addition to the sizable CGI contract for Hawaii’s health insurance exchange, Andrews’ office has just hired local public relations/marketing firm Milici Valenti Ng Pack for $1.2 million to spread the word about the federal plan in order to reach its full scope. For example, many small businesses in Hawaii have been unaware of tax credits for payments of employee health insurance, she said. Businesses with fewer than 25 employees could have been eligible for the 35 percent federal tax credit for their health insurance costs since 2010.

The effect of those tax credits could be extensive, as nearly 27,000 businesses in Hawaii have fewer than 20 employees, making them exempt from the mandate, but nearly 80 percent of small businesses provide health insurance for employees.

"We understand that just getting some help in filling out tax forms has been one of the barriers of small businesses applying for the tax credit and the other is just simply that many are not aware," Andrews said. She was told by an accountant recently who had assisted a small business in applying for tax credit that they were able to realize $17,000 in credit from employee health insurance.

Beyond differences between Hawaii’s health care plan and those in other states, Andrews said, "We do truly embrace the idea that we want this to be of Hawaii for Hawaii."