Governor favors single-payer health care

The stumbling of the Hawaii Health Connector, the online health insurance marketplace, could open the door for the state to consider replacing it with a single-payer system for health insurance, an option Gov. Neil Abercrombie favors.

"A single-payer system is one of several options in achieving universal health care coverage, which is the ultimate goal," Gov. Neil Abercrombie said in a statement to the Honolulu Star-Advertiser. The single-payer option was the only one listed by Abercrombie when asked what might take the place of the Connector.

Typically a single-payer system means the government pays for health care through tax collections. Private insurers still process claims and make benefit determinations, but they would function in a reduced role as a fiscal intermediary the same way they do for Medicare. They would be paid by the government, the single payer, rather than collect premiums from companies and individuals.

"There are a few states that have been thinking single-payer all along," said Frances Miller, a visiting professor at the University of Hawaii William S. Richardson School of Law, who teaches health care regulation and finance at Boston University. "The more this whole thing gets to be a mess the exchange business the more it looks like an attractive option. You hear all the time that Abercrombie’s interested in single-payer."

Hawaii and other states have an opportunity to adopt a new health care system in a few years as part of President Barack Obama’s Affordable Care Act. States can apply for innovation waivers starting in 2017 that would allow them to run a completely different health care system. To qualify for innovation waivers, states must establish reform plans that would provide coverage that is at least as comprehensive and affordable as Obamacare for at least as many residents and would not increase the federal deficit.

Hawaii could seek a federal waiver to build a single-payer system.

A single-payer system would mean Hawaii’s 1974 Prepaid Health Care Act, which requires employers to provide insurance coverage to full-time workers, a practice that has worked to insure the bulk of the population, would no longer be needed.

"If we do go down the road of universal health care, whether it’s single-payer or some other form, you probably won’t need the Prepaid Health Care Act because we’ll find an alternative way to cover every single life," said Blake Oshiro, the governor’s deputy chief of staff. "He (Abercrombie) really wants to see us moving down the road to universal coverage."

The issue has come up because the Hawaii Health Connector, the state’s version of an Obamacare health insurance exchange, had a rough launch and has proved to be financially unsustainable. As a result, state lawmakers are looking for alternative ways to deliver health coverage as mandated by the Affordable Care Act.

The Connector has been plagued with computer problems from the get-go, causing it to miss its scheduled Oct. 1 launch date. The exchange became operational two weeks later but is still not functioning properly, with more than 40 percent of its computer glitches still unresolved.

In addition, the Connector is running out of money. Tom Matsuda, the Connector’s interim executive director, made that clear at a legislative hearing Feb. 26, saying the online marketplace will not be sustainable beyond this year when $204.3 million in federal grants expires.

The Connector won’t be able to generate enough revenue on its own because there are not enough residents who would use the exchange, Matsuda said. The only funding source is a 2 percent fee on premiums. The Connector is seeking a one-year extention from the federal government to use the grants but after that would still be left without enough money to survive, Matsuda told lawmakers.

The Connector needs $15 million a year to operate but anticipated in its budget that it will raise only $1 million a year from fees. The Connector has taken in 20,018 individual applications but enrolled just 4,661 people.

Lawmakers had proposed turning the nonprofit into a state agency financed by the general fund, but recently gutted a bill that would do so because of liability issues.

House Health Committee Chairwoman Della Au Belatti (D, Moiliili-Makiki-Tantalus) said lawmakers are still considering proposals that would give the Legislature oversight of the exchange and authorize the state Insurance Commissioner to collect a fee from all insurers to pay for Connector operations.

Matsuda declined to comment, saying through a spokesman that he didn’t want to speculate on Hawaii’s options absent a state-based exchange.

Among other alternatives the state could pursue is having the federal government run the exchange to "get out from the whole mess," Miller said.

"At the end of the day, it may not make all that much difference," she said. "The differences between individual states are beginning to matter less and less. The whole rest of the country is catching up with Hawaii, and like it or not, it’s the law of the land."