As state officials attempt to "right-size" the troubled Hawaii Health Connector, the head of the state’s largest medical insurer is urging leaders to immediately dismantle the exchange, at least for small businesses.
Mike Gold, president and chief executive officer of Hawaii Medical Service Association, said taxpayers have wasted enough money and will continue to do so if the state doesn’t act fast to request a federal waiver to opt out of the exchange in 2015.
Those comments riled two key lawmakers who had the biggest hand in drafting legislation this year to transform the online marketplace created by President Barack Obama’s Affordable Care Act.
They say the federal government will only allow the state to seek a waiver in 2017 and that the comments by HMSA, one of two health insurers selling plans on the exchange, are misleading.
"It is very disingenuous, disheartening and disappointing to learn that the CEO of HMSA is now calling for the dismantling, shutting down and federalization of the Health Connector," Rep. Della Au Belatti said. "During this long and arduous legislative session, state lawmakers were extensively briefed by all stakeholders on the health connector, including the governor’s department heads, the attorney general and HMSA in how to restructure, reform and right-size the Hawaii Health Connector."
Gold said that he was referring specifically to the small-business part of the exchange, which is unnecessary since Hawaii already has a long-standing Prepaid Health Care Act that requires employers provide health insurance for full-time workers, a practice that is responsible for insuring the bulk of the population.
"That’s the part of the Connector that I really don’t understand how it adds any value to Hawaii," he said. "I think it’s useful for individuals. What I’m saying is get rid of (the small-business exchange) … and then find a way — whether it’s a Hawaii Connector, whether it’s the federal connector or whether you don’t even need a Connector for individuals — find a way to cover those individuals in the most effective and efficient way possible."
As is, he said, the state is "just setting up another level of process that has to happen that somebody is going to have to pay for going forward. That somebody is all of us. One way or the other, whether it’s fees or whether it’s taxes that come out of the general fund, you have to pay for smoothing that’s not necessary."
HMSA said costs related to Obamacare are responsible for the bulk of a 12.8 percent proposed rate hike for most of the 77,000 small-business workers renewing health plans July 1.
Gold said he has felt this way from the beginning of the ACA, though HMSA supported the creation of the exchange before the possibility of federal waivers was ever announced.
Up until this year, individuals and small businesses went directly to carriers to obtain insurance, a process that has been successful to date, he said.
"It seems very strange to me that at the same time HMSA is asking for a rate increase of nearly 13 percent, at the same time that the bill removing HMSA from the board is going to the governor for his signature, that HMSA now suddenly questions the need for a health exchange — an exchange that HMSA sits on and has been involved in from Day One," Angus McKelvey, who along with Belatti called a press conference Friday specifically to address Gold’s comments to media. "It’s very problematic but suggests that we should take a closer look at what’s really driving the cost of health care here in Hawaii."
Sherry Menor McNamara, chairwoman of the Connector’s board of directors, said both the Connector and legislators are engaged in ‘right-sizing’ the Connector to make it as responsive and efficient as possible.
Legislators say they have "put the Hawaii Health Connector on a corrective course to the future" with the passage of Senate Bill 2470, which establishes a legislative oversight committee, removes health insurers from the board, requires an annual sustainability plan and appropriates $1.5 million for Connector operations next year.
Separately, House Bill 2581 establishes a task force to develop a plan for applying for a state innovation waiver that could relieve Hawaii from having an exchange.
"Gov. Abercrombie has expressed his support for a waiver for Hawaii, especially given our state’s already relative low rate of uninsured," state Healthcare Transformation Coordinator Beth Giesting said in a statement.
"Since the federal ACA is clear that waivers are not available until 2017, we have been working with the nonprofit Connector board to seek some flexibility with the federal government to ensure that processes for the Connector are congruent with the system that’s evolved over the last 40 years with the Hawaii Prepaid Health Care Act."
Kaiser Permanente Hawaii, the only other insurer participating on the Connector, said it supports the continuation of the exchange, which is the only place individuals and small businesses can apply for financial assistance and tax credits to reduce the cost of insurance.
"The Connector has had challenges, as do most startup businesses," said Kaiser spokeswoman Laura Lott. "We expect that as it matures it has the potential to be a valuable community resource that continues to complement our existing health care infrastructure."
Hawaii’s nonprofit health exchange, established by the Legislature in 2011, opened two weeks late Oct. 15 and continues to be plagued with technical problems, particularly in the small-business marketplace. The Connector received $204.3 million in federal grants that expire at year’s end and has spent roughly half that to date. Through its first open enrollment period, which ended April 30, the Connector signed up nearly 9,800 individuals and raised $40,350 in fees paid by insurers participating on the exchange.
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Star-Advertiser reporter Sarah Zoellick contributed to this report.
