Hawaii lawmakers are considering whether it makes sense to get out of some requirements of the federal Affordable Care Act so that they can make substantial changes to the state’s troubled health insurance exchange.

States like Hawaii that run their own exchanges can apply for a so-called innovation waiver if they meet certain criteria.

One idea that’s been floated is for Hawaii to drop the employer side of its exchange, because thanks to the state’s Prepaid Health Care Act, Hawaii already has a strong law requiring employers to subsidize health insurance for many workers.

"We have to determine exactly what we want to do with our state based exchange," said Rep. Della Au Bellati, chairwoman of the House Health Committee, in an interview. "If we want to replace it, what is it going to look like? Those are all still open questions."

A state audit released Thursday detailed myriad problems with the way contracts were awarded and money was spent at the Hawaii Health Connector after the exchange was granted $204 million in federal funds.

In addition to federal dollars, the exchange was granted $1.5 million by the Legislature last year to fund its operations. Officials have said they would likely need about $20 million from the Legislature over the next few years before reaching sustainability, so some lawmakers have suggested doing away with the exchange.

The Legislature established a task force last year to consider alternatives, such as letting the federal government step in to run the Connector. But many experts say a federal takeover is too risky, because it could jeopardize the Prepaid Health Care Act. On a federally-run exchange, employers could potentially buy health insurance plans that offer fewer benefits than what’s required by Hawaii state law, said Rep. Angus McKelvey.

More than a dozen state officials and business executives are on the State Innovation Waiver Task Force which began meeting in September. The federal government has made it clear that it will not grant waivers before 2017, despite the state’s requests for an earlier date.

The task force’s first report to the Legislature set out broad goals of examining different options, but didn’t include details about what would happen under different scenarios. The report recommended that the Legislature provide more than $1 million to the task force for personnel, consultants and neighbor island travel. The group also said that it’s possible that it might not finish its work by 2017, because the Legislature and governor need to reach agreement on the proposed direction of the waiver, and there are long periods of time required for steps like public input.

House lawmakers briefly discussed the bill about the task force — HB 576 — Friday, but deferred action to a future meeting of the Health Committee.

Bellati said the Legislature will be weighing in on the direction of the Hawaii Health Connector throughout the session, and focusing on how to harmonize the benefits of Hawaii’s strong state law with the federal Affordable Care Act.

"We know that there are serious concerns," Bellati said.