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Withheld federal grants send Connector contractor packing

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The Hawaii Health Connector’s federal grants are still frozen, and at least one major technology and oversight contractor has walked off the job.

The state’s health insurance exchange is still waiting for approval from Washington to release more than $10 million in federal grants it needs to pay its vendors and keep the organization afloat while it transitions to the federal marketplace, said Executive Director Jeff Kissel.

“We now have contractors walking off the job because they’re not being paid,” he said Thursday. “We need that money to perform the tasks that are essential for the transition.”

The Connector, created by the Affordable Care Act, is closing down most functions and moving them to the federal Obamacare program,, after spending $130 million on the faulty exchange.

The feds froze the Connector’s remaining grants when it couldn’t reach sustainability, resolve ongoing technology issues or connect with the Medicaid program that determines eligibility for Obamacare subsidies.

When asked why the federal government hasn’t released the funds, Kissel said, “We don’t know. We’ve submitted everything that the federal government has asked for.”

Turning Point, the Connector’s independent validation and verification contractor, gave notice this week that it would no longer be doing work for the exchange because it hasn’t been paid, Kissel said. He said he didn’t immediately know how much was owed to the contractor.

The exchange has about four other major contractors who have not been paid, Kissel added.

“I’ve told the public our good points as well as our flaws, and I can’t withhold information now that we’re in a difficult period,” he said.

Laurel Johnston, Gov. David Ige’s deputy chief of staff who has been negotiating for the release of the federal funds, also said she did not know why the money isn’t being released.

Ige has signed off on the Connector receiving the $2 million the state Legislature appropriated this year for the health exchange, a spokeswoman for the governor said Thursday. The Connector will get the money after July 1, the start of the new fiscal year.

Ige’s administration decided earlier this month to abandon the troubled Connector, which has struggled since its launch in October 2013 to meet enrollment targets, provide satisfactory service and raise enough money to be self-sustaining.

The exchange has already started staff reductions, so far laying off 29 temporary employees. Nearly 200 workers will be affected as the health insurance exchange winds down operations.

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