Hopeful shifts in Connector fix

The online medical insurance exchange known as the Hawaii Health Connector got some rare good news. The federal government recently granted an extension for the nonprofit agency to use $75 million in remaining grant money to finish the basic work of establishing the state’s health-insurance marketplace under the Affordable Care Act.

According to officials, however, the news does not justify the collective sigh of relief that some may think it does. This means there’s a lot more work Hawaii must do to implement health reform in a way that suits the state’s modest needs — and in a way that taps further state funds as little as possible.

One encouraging prospect: All of the candidates seeking to be the state’s next governor seem inclined to find a better, more economical way of serving the uninsured.

Hawaii has been in the vanguard among states for drastically reducing the number of residents who are uninsured, one of the key goals the ACA intended to achieve for the nation. Ironically, this success has made the national model for expanding health coverage — the online marketplaces — a poor fit for Hawaii.

They have been very expensive to develop — the $75 million is what remains of the largest, $128 million grant, the lion’s share of the federal total outlay of $205 million. The rest of the money, almost spent, was to build the exchange system itself — a website to enable online enrollment and comparison shopping.

The critical issue is that with a relatively small population remaining to purchase health insurance, insufficient revenue has been generated to run the agency, which was meant to be self-sustaining.

Tom Matsuda, the Connector’s interim executive director, said the $75 million is restricted for spending on developing the marketplace, not maintenance or operation. This means the $1.5 million lawmakers appropriated in emergency operational funds for the Connector through June is still required.

It also drastically sharpens the imperative on the nonprofit to whittle its operational costs, something Matsuda said will be happening in the coming months. Amid lowered forecasts for state revenues, it seems unlikely the Legislature will have much money to carve out for more Connector support.

The grant extension had been anticipated, he added — federal authorities have been extending deadlines for the use of similar grants in other states. But it at least enables the Connector to move ahead with efforts to bolster its insurance marketplace.

The urgency for such efforts increased last week when the Hawaii Medical Service Association withdrew from a major element of the exchange, the part that offers health insurance plans for small businesses, providing tax credits to make them more affordable. This leaves only Kaiser Permanente serving the small-business market — which is where many of those currently uninsured are found.

Matsuda believes the smaller insurance carriers will now find their niche in the small-business market and join the Connector, which would be good for competition. But although the exchange has improved its online experience since the glitchy October 2013 launch, more upgrades are needed to provide a more seamless enrollment and billing support service. This has been one frustration that must be overcome to make enrollment appealing to small carriers and their businesses clientele.

Even more important is the work of a task force lawmakers authorized to take advantage of an opening in 2017 for an "innovation waiver" — approval for an alternative insurance delivery system. Beth Giesting, the state’s health-care transformation coordinator, said the group would convene soon and have a report for the Legislature before the next session.

Matsuda said that whatever "innovation" is created for 2017, the law still requires it to perform basic functions, such as determining eligibility for financial assistance, allowing comparison shopping and enabling enrollment. Without further changes in the law, it won’t be as easy to jettison parts of the ACA as some politicians suggest.

Still, the political will to find a better way for Hawaii — one suited to our unique environment — is essential. Now the politicians must come up with specifics for how they intend to pursue that goal.