Senate OKs bill allowing Connector to borrow $28 million

A bill that would allow the Hawaii Health Connector health insurance exchange to borrow as much as $28 million in bonds backed by the state moved a step closer to passage Tuesday.

Senate Bill 1028 moved to the House, two days before Thursday’s official crossover deadline. Bills that don’t pass out of their chamber of origin by the deadline are essentially dead.

The bonds are crucial to the continued operation of the Connector, created by President Barack Obama’s Affordable Care Act, because the program will not be self-sustaining until 2022.

"We’re highly confident that we can meet our commitments and pay back the debt," said Connector Executive Director Jeff Kissel. "More importantly, with the expanded Medicaid and over 30,000 in ACA policies, Hawaii has nearly 100,000 more people with access to health care than it did the same time last year. That’s hundreds of millions of dollars that the community is not having to pay out in uncompensated medical costs each year."

Enrollment on the exchange grew to 30,000 last week, surpassing the Connector’s 27,280 goal for the fiscal year ending June 30. The Connector collects a 2 percent fee on each health plan sold, which generates about $10 per member per month.

The latest enrollment figures will generate annual revenue of $3.6 million, far less than the $12 million in expenses the Connector is currently projecting.

In an effort to reach sustainability, the organization’s board of directors Friday approved increasing the fee on health plans to 3.5 percent from 2 percent, starting July 1. The nonprofit created by the Legislature in 2011 pro­jects enrollment will grow to around 100,000 by 2024.

Senate Bill 1338, which also passed to the House on Tuesday, opens the small-business exchange to employer groups with up to 100 workers as early as July 1. Currently, only employers with 50 workers or fewer can purchase coverage through the exchange.

In addition, the bill makes large groups with more than 100 employees eligible purchasers starting in 2017. The legislation also would end transitional policies that don’t comply with the ACA, but were approved by the state through 2016, a year early, and requires employers to notify laid-off workers about their options on the exchange.