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Hawaii Health Connector won't be sustainable after 2014

By Kristen Consillio

LAST UPDATED: 2:26 p.m. HST, Feb 26, 2014

Hawaii's health insurance exchange won't be sustainable beyond this year and will seek to change the existing Affordable Care Act rules for the state, Tom Matsuda, interim executive director of the Hawaii Health Connector, told lawmakers Wednesday.

Hawaii's "market dynamics are not right for an online marketplace of this type" and there is "little chance of the Connector becoming self-sustaining under its current revenue model," Matsuda said.

The current revenue model allows the Connector to collect a 2 percent fee on plans sold on the online marketplace created by President Barack Obama's signature health care law.

"Our revenue projections, using the best available data, and looking at a dozen variables that affect future enrollment, mean that we're not even close to breaking even," he said. "Even with substantial reductions to the estimated $15 million annual operating budget we will not be sustainable."

Matsuda testified before the House Finance Committee, based on the preliminary findings of a sustainability plan by the Connector's board of directors held last week. The sustainability planning process is still under way and the board will be exploring other revenue sources allowed under the Affordable Care Act in its next phase of sustainability planning.

The nonprofit is seeking a one-year extension to use $204.3 million in federal grant funds that expire by year's end. The Connector also will seek a federal waiver in 2017 to alter or modify ACA rules to fit Hawaii's insurance market.

Lawmakers are considering turning the Connector into a state agency after it fumbled the start of the exchange, which went live two weeks after its scheduled Oct. 1 launch due to software problems that continue to plague the system.

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