Proposal sets fee to shore up health exchange

Hawaii lawmakers are considering supporting the state’s troubled health insurance exchange with up to $15 million per year.

It’s not clear whether the money would come entirely from a proposed sustainability fee on insurers or general fund appropriations. The fee would hit insurers that aren’t participating in the exchange.

Officials from the Hawai‘i Health Connector have said the nonprofit needs about $15 million per year to operate. It has enough money to last through the end of 2014 and part of next year.

The Senate Ways and Means Committee plans to consider the bill Friday. Its chairman, Sen. David Ige, said he needs to know how the exchange spent its federal funds before he will hand over any cash from the state.

"At this point in time, the question is really one of accountability," Ige said.

"We would want to see an accounting of any funds they received from the federal government and how they were extended."

The exchange was established with $205 million in federal grants but has not spent all of the money already. As of Friday, it has gone through about $100 million, exchange officials said. But the federal government denied the state’s request to spend the money on its operating expenses more slowly.

Far fewer people than expected enrolled in health insurance plans through the Hawai‘i Health Connector, so the exchange has not collected enough revenues to be independently sustainable.

There were 5,744 individuals enrolled in plans at the end of last week, according to the Connector’s website.

"They had expected to serve 100,000 to 150,000 to even as many as 200,000 customers, and they are woefully below that level," Ige said.

The language was added to a version of a bill (House Bill 2529) that has been working its way through Senate committees. It was included during a joint meeting of the Senate’s Health and Commerce and Consumer Protection Committees on March 18, and the Ways and Means Committee was informed of the changes on Friday.

Starting in January, the state insurance commissioner would collect an annual sustainability fee of no more than 0.345 percent of medical and dental insurance premiums sold by insurers that are not selling plans through the Connector website.

Money collected from sustainability fees would be collected in a health insurance exchange special fund, which would be administered by Hawaii’s Department of Commerce and Consumer Affairs.

Lawmakers who drafted the change did not immediately return calls for comment on Wednesday, which was Prince Kuhio Day and a state holiday. Most state offices were closed.