State lawmakers agreed Friday to give Hawaii’s troubled health insurance exchange just $2 million, less than half the amount exchange officials said was needed to be sustainable for the fiscal year starting July 1.
The Hawaii Health Connector had originally asked for $5.4 million in taxpayer dollars to be self-sustaining this year, a requirement of the Affordable Care Act, also known as Obamacare.
"We’re going to go back to our board and work with what we got to see how to maintain Hawaii’s state-based marketplace," said Jeff Kissel, the Connector’s executive director. "We appreciate the support of the Legislature and are looking for ways to continue to provide state-based exchange services. … I haven’t in any way given up looking for a strategy to keep Hawaii’s 45,000 people who have been enrolled in expanded Medicaid and 30,000 people now in Connector programs covered through a state-based marketplace."
The state was notified in March that Hawaii was out of compliance with the ACA because the exchange wasn’t financially sustainable. The federal government subsequently restricted grant money to support the exchange.
The legislators in conference committee also decided not to fund the nonprofit Connector in 2017, posing a significant problem for the organization, which is already being pressured to move individual customers to the federally facilitated marketplace, healthcare.gov.
Some state officials are worried that if the federal government takes over exchange operations, Hawaii’s 1974 Prepaid Health Care Act, requiring employers to provide health insurance for employees working at least 20 hours per week, will be abolished, and more people will become uninsured.
Last year lawmakers appropriated $1.5 million for the exchange.
This year the Legislature quashed a bill that would allow the exchange to borrow as much as $28 million in bonds backed by the state. The Connector projects it will need the $28 million to operate through 2022, when it anticipates becoming financially sustainable.
The Connector was awarded $204.3 million in federal grants to build and operate the online marketplace designed to provide subsidized health coverage for those with incomes too high to qualify for Medicaid, the government health insurance program for low-income residents.
All but about $70 million of the federal grant money has been spent, and the federal government is restricting use of the remaining funds until the state provides a contingency plan to federal authorities, Kissel said.
The restriction is affecting the Connector’s ability to improve its technology, which has been a problem for users since its inception in October 2013.