Hawaii needs waiver from ACA without delay

The Hawaii Health Connector, as it turns out, does not connect well with the health care reality of Hawaii. The reality is that Hawaii already has decades of success with its own health care law, with the result that the costs of running the Web portal far outweigh the benefits.

The online health insurance marketplace was set up, as in other states, as a function of the Affordable Care Act. After a $204 million investment in federal funds at the start, it was meant to become self-sustaining.

It’s hard to see how that will ever happen — or at least not before Hawaii spends too much to keep it afloat.

Michael Gold, president and chief executive officer of the Hawaii Medical Service Association, caused a stir last week when he asserted that it was time to largely pull the plug on the Connector, a lot sooner than the ACA would allow. There simply is not enough of an uninsured population to make the operation pencil out, either for the taxpayers who currently are supporting it or for the business and individual customers who ultimately will pick up the tab.

Gold advocates that the state pursue a waiver now, rather than waiting for 2017, when the law provides for state "innovation waivers." Private insurers have their own corporate interests at heart when they push to remove the "middle man," but Gold is right that the exchange is not a good fit.

And although an accelerated pursuit would be a heavy lift politically, the top-tier leaders of the state — the governor and our congressional delegates — must find a way to override the health exchange requirement, or at least to scale it back, for the public good.

The story begins some 40 years ago, with the state’s passage of the Hawaii Prepaid Health Care Act. Its employer mandate to provide health coverage for employees gave the overwhelming majority of residents access to insurance. In a recent interview with the Star-Advertiser, Tom Matsuda, the Connector’s interim executive director, summed up the basic problem: Hawaii’s health care progress to date has cut into the potential benefits of the Connector.

"Because of Prepaid, we have one of the lowest uninsured rates in the whole country," Matsuda said. "The impact of that on our sustainability is that the pool of people who are uninsured, who need to sign up and get coverage under the ACA, is relatively small. So that means we have fewer opportunities for enrollment on the individual side. That means we’ll have less revenue. That means it’s harder for us to sustain."

The most recent numbers posted on the Connector tell the tale. As of Tuesday, the site had logged 31,758 applications completed in the individual marketplace, with 9,286 individuals and families enrolled. On the small business "SHOP Marketplace," 595 employers have applied, and 631 employees and dependents are enrolled there.

That has raised roughly only $40,000 in user fees, not enough to sustain the Connector. But when counted along with other fees insurers pay under the ACA, these costs contributed to first-quarter losses reported by HMSA and Kaiser Permanente, the only other insurer working through the Connector. The companies are seeking rate increases and citing those costs.

State lawmakers this session worked to improve governance of the Connector, eliminating representatives of the insurers themselves as voting members of the board. They also drastically reduced to $1.5 million the agency’s requested state support and authorized a task force to plan for the waiver in 2017.

The task force should begin work right away, to devise a means that would give Hawaii residents and businesses access to the benefits of the ACA — the subsidies and tax credits — through a less expensive portal. There ought to be a way to direct shoppers who don’t qualify for Medicaid to plans displayed on the health insurers’ own sites in order to compare options.

It might not be as elegant as the Amazon.com-style of Web marketplace envisioned for the exchange, but that’s a loss the state could live with.

State legislators say they inquired about a pre-2017 waiver and were rebuffed. There may be an aversion to pushing this point — Hawaii is the president’s home state. Seeking a waiver from his signature law during an election year will start a political narrative the Democratic leadership would find awkward.

But the public interest, not politics, has to be the overriding concern. Elected leaders here have to find a more efficient way to administer the ACA for taxpayers, who already enjoy the benefits of a robust health-care policy. And there’s no time like the present for this action.