Connector chief talks to Congress

Jeff Kissel, head of the Hawaii Health Connector, testified Tuesday before Congress that earlier mismanagement in implementing the Affordable Care Act led to the state’s decision to wind down the insurance exchange’s operations and move enrollment to the federal Obamacare program.

The U.S. House of Representatives Committee on Energy and Commerce’s Subcommittee on Oversight and Investigations held an informational briefing to examine the ACA’s state-based insurance marketplaces, which were awarded $5.5 billion in federal taxpayer dollars but failed to enroll the number of people needed to become self-sustaining.

Kissel testified that nearly 40,000 Hawaii residents have enrolled in Obamacare, but the insurer needed 70,000 to generate the $12 million a year it required to be self-sufficient.

Gov. David Ige announced in May the administration would shut down Hawaii’s exchange, shift operations to the state and rely on the federal healthcare.gov website to re-enroll existing members for 2016. He acknowledged at the time that Hawaii was out of compliance with the ACA because of its low enrollment and at risk of losing $1 billion in Medicaid funds if the situation wasn’t remedied.

The Connector has committed or spent roughly $140 million of $205 million in federal grants awarded to establish the exchange, which has struggled since its launch in October 2013 to meet enrollment targets, provide satisfactory service and raise enough money to be self-sustaining.

In his testimony, Kissel said a “lack of planning, unclear business processes and utterly inadequate program management” were to blame for “both excessive spending and delays in delivering these important services to the people who needed them most in our state.”

Though the Connector enrolled only 8,500 people in the first year of operations, Kissel painted a rosier picture of the situation after he got on board.

“I joined the Connector in early October 2014. Since then we added transparency to our communication, revamped our enrollment and outreach processes, implemented conventional project controls and successfully completed the technology build,” he told the committee.

However, despite a more than 400 percent jump in enrollment, Kissel said that “the cost of maintaining, upgrading and ultimately replacing the technology” had the potential to exceed its initial cost, which would be borne by Hawaii taxpayers.

The Connector is spending between $5 million and $7 million to decommission and shut down operations by October 2016. The exchange has also budgeted an additional $7 million for outreach over the next year, he said.

Among the successes of the ACA, Kissel said, Hawaii has made significant progress in reducing its uninsured population, which is down to 3 percent from 10 percent prior to Obamacare.

But that has come at a cost. The Hawaii Medical Service Association, the state’s largest health insurer, is boosting premiums by nearly 50 percent for members who purchased coverage on the exchange. HMSA’s proposed monthly premiums for individuals who purchased coverage through the Connector will rise to an average $413.81.

That’s the highest rate increase among the states, Kissel said.

“When the Affordable Care Act policies were introduced, the insurance companies experienced a lot of negative selection,” he told the committee. “The sickest people enrolled first.”