The Hawaii Health Connector, which was expecting its funding to end on Dec. 31, now says it can continue using federal grant money throughout 2015.
Tom Matsuda, interim executive director of the Connector, said the nonprofit had approximately $75 million of its original $204.3 million grant remaining as of June.
The Connector is the online marketplace for health insurance created by the Affordable Care Act, often called Obamacare.
The Centers for Medicare and Medicaid Services, which oversees the exchange, recently approved the extension, giving the Connector money for at least another year of operations.
The money "will either be spent this year or approved to be spent next year," Matsuda said, adding that the Connector will "continue to work with our federal funders on a cost-reduction plan."
State lawmakers, anticipating the end of federal financing, granted the Connector $1.5 million for operations next year, one-third of its funding request.
"We’re hoping they can use all remaining (federal) grant monies so the state won’t have to put any of the $1.5 million forward," said Rep. Angus McKelvey (D, West Maui), House Consumer Protection and Commerce Committee chairman. "It is a federal creation that was foisted upon us so it’s fitting for the Feds to pick up the tab instead of having the states bear the costs."
The Connector is working on a cost-reduction plan with CMS that may include staff reductions as it seeks ways to be financially sustainable for the future.
Those efforts, however, may be stifled by the lack of insurers and competition on the exchange.
The Hawaii Medical Service Association, the state’s dominant health insurer, announced Friday it is withdrawing from the small-business portion of the exchange due to the significant time and money it has spent dealing with the ongoing technical problems of the Connector. It is continuing to sell individual policies on the exchange.
Several smaller local health plans — including UHA (University Health Alliance), the Hawaii Medical Assurance Association and Family Health Hawaii — declined to be part of the Connector from the start because of the significant costs and "no real benefits."
HMSA’s departure leaves Kaiser Permanente Hawaii with a virtual monopoly on small businesses on the Connector.
"We believe that small businesses will still see the value of signing up with Kaiser and allowing the Connector to provide the value it was designed to do for employers," Matsuda said. "We are here to build something that lasts, and we understood going into this that some insurers would opt to not participate in the first year."
The Connector will be working with the state Insurance Division and federal partners to identify and support any small-group insurers who might want to sell health plans on the Connector next year, he added.
HMSA’s decision to pull out of the exchange known as the Small Business Health Options Program may actually work to open the way for smaller firms to join the marketplace, Matsuda said, adding that insurers in the small-group market have been hesitant to join the Connector in part because they depend on brokers to refer clients to their plans. HMSA does not pay broker commissions so brokers had a disincentive to bring clients to the SHOP as long as HMSA plans were available, he said.
"With HMSA’s departure, those insurers may now have a business reason to join the Connector, knowing that many brokers will be assured commission on SHOP plans as they are in other states," he said. "We believe that small-group insurers may now see an opportunity to join the Connector."
The Connector failed to launch on Oct. 1, the first day of open enrollment, and has since been plagued with computer problems, frustrating consumers throughout the sign-up period that ended in April. It enrolled just 10,800 people this year.
The exchange is the only place individuals and small businesses can get subsidies and tax credits to reduce the cost of coverage. However, Connector officials said it doesn’t track the number of people and groups that have received financial assistance.
"We do know that nationwide these numbers are relatively low, which is a missed opportunity for individuals and small businesses," Matsuda said. "This is one of the reasons we have been working hard to educate the public about the importance of the tax credits and to explore their options with the Connector."
