Health Connector wants help from DHS

The Hawaii Health Connector, which has struggled to enroll Hawaii residents in health insurance plans, is proposing to shift a key part of the application process to the state Department of Human Services.

The Connector’s interim executive director, Tom Matsuda, told lawmakers at an informational briefing Wednesday that having the DHS, instead of the Connector, determine whether applicants can receive tax credits to help pay for health insurance is the best solution to improve consumer experience and cut costs.

Currently, an applicant seeking tax credits from the Connector is first routed to the DHS to see whether they qualify for Medicaid, the government insurance program for low-income residents.

Consumers were held up at that point because the DHS didn’t collect information the Connector needed to determine tax credit eligibility and because the two enrollment systems were incompatible, the Connector said, causing a bottleneck in enrollments on the exchange.

"It’s been a source of a lot of difficulty for both the Connector and DHS," Matsuda said. "We’re hoping it (having DHS handle tax credits) will solve a lot of problems not just for us, but mainly the consumers."

The Connector, which is responsible for implementing President Barack Obama’s Affordable Care Act in Hawaii, collected more than 24,000 applications as of the March 31 deadline, but enrolled fewer than 8,000 people.

Acting State Auditor Jan Yamane also presented preliminary results from an audit of the Connector to lawmakers, citing the Connector had spent $55.5 million by the end of 2013, including about $35 million on information technology contracts, software and licensing. Most of that, nearly $22 million, went to embattled contractor CGI, which also built the problematic federal exchange.

Yamane said her office anticipates delivering a full audit report in late fall.

The Connector is projecting a $4.7 million deficit in the first half of next year after the remainder of $204.3 million in federal funds expires in 2014.

The Connector is projecting enrollment to grow to 37,100 in 2015 and 51,400 in 2016.

Lawmakers are considering funding options, including imposing a fee on all insurers, to keep the Connector afloat at least until 2017.

Having the DHS take over part of the Connector’s job is seen as one way to save money.

"I see there’s a duplication of services going on," said House Health Committee chairwoman Della Au Belatti (D, Makiki-Tantalus-Papa­kolea). "That might be a smart move."

The nonprofit Connector and the DHS have been battling for months over which entity would determine eligibility for individuals seeking tax credits to reduce the cost of Obamacare coverage. If the DHS takes over eligibility, the state may be able to secure additional funds from the federal government.

"We believe it will be a very cost-effective move, reducing duplication in the system and allowing us to bring in some federal funds," Beth Giesting, the state’s health transformation coordinator, told lawmakers. "We do think this is probably the most cost-effective solution. It will be much clearer for everybody going forward."

The next open enrollment period is Nov. 15 through Feb. 15.

Other steps the Connector may take to reduce costs, according to Matsuda, include cutting employees, wages and spending on outreach and public relations.

If the Connector’s cost reductions aren’t enough, the federal government may take over, state Insurance Commissioner Gordon Ito warned lawmakers.

"That’s a real threat," which could jeopardize the state’s Prepaid Health Care Act, responsible for insuring the bulk of Hawaii’s population, Ito said. The 1974 Prepaid Health Care law requires employers to provide health coverage for full-time workers.