A House committee amended a bill Monday to immediately exclude health insurers and providers from a board appointed by Gov. Neil Abercrombie to oversee a federally mandated health insurance exchange.

Consumer advocates testified that allowing Hawaii Medical Service Association, Kaiser Permanente Hawaii and Hawaii Dental Service to remain on the 11-member exchange board would be a conflict of interest because they will have a direct financial stake in decisions of the exchange, known as the Hawaii Health Connector.

The federal Affordable Care Act, signed into law by President Barack Obama in March 2010, requires all states to set up a health insurance exchange that will match uninsured individuals to subsidized health care plans. The Hawaii Health Connector could be used by as many as 100,000 uninsured Hawaii residents to select their health care coverage.

Harris Nakamoto, who represented the Ohana Health Plan, withdrew as a Hawaii Health Connector board nominee Monday after accepting a position at Kaiser. The amended bill also would apply to the Hawaii Primary Care Association and the Maui Medical Group, leaving Abercrombie with the task of replacing six of his 11 appointees. Those board members removed could remain as nonvoting members in an advisory capacity.

Monday’s amendment to SB 2434 by the House Committee on Consumer Protection and Commerce sets up a conflict Friday in which the Senate Committee on Commerce and Consumer Protection is scheduled to hold a confirmation hearing on all of Abercrombie’s nominees to the exchange.

"If they confirm the nominees and the law passes, they would have to be removed because then the law would be in effect and they could not serve," said Barbara Kim Stanton, state director of AARP Hawaii.

"The consumer advocates were very pleased that the Consumer Protection and Commerce Committee heard the concerns of the consumers and made the significant amendments to protect consumer interests," Stanton said.

Consumer groups and community organizations held a news conference Monday in the Capitol Rotunda to voice their objection to insurance company representatives serving on the Hawaii Health Connector board, which they said presented a conflict of interest. The consumer advocates said the exchange, due to begin in January 2014, would represent a new market valued at an estimated $300 million.

"We say have a level playing field," Stanton said. "Have all the health plans compete fairly, but you shouldn’t have some in on the board determining what the rules of competition will be. You should have them all out, and if you need information, have a technical advisory panel."

Beth Giesting, health care transformation coordinator for the Abercrombie administration, said she respects the consumer advocates’ viewpoint about the potential for conflict.

"I also respect there is another side to it, and that is the insurers have been with us as important stakeholders and constituents and have helped us a lot," she said.

Rep. Ryan Yamane (D, Mililani-Wai­pio Gentry) chairman of the House Health Committee and vice chairman of the Consumer Protection panel, said the recommendations were made to address the concerns of various entities.

"What we wanted to do is protect the intent of the law, which is to offer these programs to consumers," he said.