Hawaii seeks path from Obamacare back to Prepaid

Hawaii’s health care policymakers are looking at 2017, when a new waiver from federal law could take effect, as the year things might get a bit rosier.

The players here, as in every other state in the Union, have lots to say about the Affordable Care Act (ACA), not all of it a sunny assessment.

On the government side, Judy Mohr Peterson, who heads the state’s Medicaid program, acknowledged the primary benefit of the ACA may be less noticeable in Hawaii. The uninsured rate here did fall from the roughly 8 to 10 percent estimated before the ACA to about 5 percent, officials said.

But basically, Peterson added, Hawaii is already accustomed to a high degree of health care coverage. This is thanks largely to the state’s Prepaid Health Care Act, sometimes called “Prepaid” for short, which essentially requires all businesses to cover their employees, and which predated the ACA by four decades.

However, Peterson cited the lowering in uninsured rates nationwide as an indisputable boon of the federal law, known informally as Obamacare, for national health security.

It may be too soon to write a fair assessment of Obamacare, Peterson acknowledged.

“But the other elements about the ACA — which are around health care transformation, focusing on paying for services differently, those aspects of it — those kinds of changes take a lot longer to work through,” she added.

Most health officials and industry executives would agree with that, but are eager to largely go back to Prepaid.

In particular, Hawaii will have a chance next year to shake off the part of the ACA that has seemed more trouble than it’s worth: the Small Business Health Options Program (SHOP). With the exchange troubled by technical glitches and other issues, the Hawaii Medical Service Association, the state’s largest carrier, pulled out of the SHOP marketplace, leaving only Kaiser Permanente offering small-business plans.

The federal law authorized online insurance marketplaces, offered at the federal and state levels, to enable price-comparison shopping for health insurance by groups and individuals. SHOP is the part of the marketplace where businesses could fulfill their federal mandate to cover employees working 30 hours a week or more.

But Hawaii and some other states have had technical issues with their local sites. Here it was the Hawaii Health Connector that proved an expensive enterprise, never truly delivering the service smoothly to potential enrollees.

Finally, many millions of dollars later, the state decided to shut down the Connector and transition the state to the federal exchange. Because Prepaid remains in effect, there were too few customers, individual or business, to make it worth the cost to run.

Gov. David Ige decided the state would use the federal website, healthcare.gov, despite a serious complication. Plans offered on the federal exchange were designed to fulfill the requirements of the ACA, but businesses were still being required under state law to buy coverage meeting the Prepaid standards, which were higher.

State officials now hope for a clearance that will resolve the conflict. The Ige administration is awaiting a federal verdict on what is called the “innovation waiver.”

The Obama administration implemented the ACA to give states the choice: Establish a local exchange or use the federal site. But in 2017, seven years after the law was signed, there would be an invitation to seek a waiver from rules that aren’t working so well for the states.

Hawaii is the first in line to get one of these waivers. The request: Give the state an “out” from the requirement to have a SHOP marketplace, and simply allow Hawaii businesses to resume buying plans directly from the insurance carriers, as they always had under Prepaid (see story, Page E4, for more about the waiver).

Until mid-August, Beth Giesting had served as the health care transformation coordinator in the governor’s office. That post was created with the passage of Obamacare, under then-Gov. Neil Abercrombie, but was eliminated under Ige.

However, Giesting was at the center of the waiver project through its submission to the U.S. Department of Health and Human Services (DHHS) and was contacted by the Honolulu Star-Advertiser for a status report.

The proposal was submitted in June, and after making revisions requested by DHHS, the application was resubmitted in August, Giesting said. There were 45 days allowed for a second round of revision requests. Assuming there are no more, the feds are allowed up to six months for the final review, both by DHHS and the Treasury Department, she said.

That 180-day clock starts running in mid-October, and officials are expecting the review to take a fair chunk of that time.

Giesting said the state had to correct a few inconsistencies, submit an actuarial assessment and demonstrate in the application that the waiver would be budget-neutral — putting nothing more on the federal tab for subsidies or other costs.

“Because it’s the first one in the country, they are going to have to dot every I and cross every T,” Giesting said.

Laurel Johnston, Ige’s deputy chief of staff, said the state will begin the next ACA enrollment period using the federal exchange. But, she said, prospects look good that the waiver will be approved and this will be the last year for Hawaii at Healthcare.gov.

“The latest communication I got was positive,” Johnston said, adding that “if they were going to approve any waiver, it would probably be Hawaii’s — it’s kind of like a no-brainer.”

The waiver application was the work of a state task force, convened a year ago, involving private stakeholders as well. HMSA, Hawaii’s largest insurer, was involved in that work and is pleased with the outcome, said Jennifer Diesman, the company’s vice president of government relations.

Making a persuasive case for returning to the Prepaid model should be easy, she said.

“Hawaii was ahead of the curve with our Prepaid Health Care Act,” Diesman said. “For 40 years we had great health care coverage, for companies of all sizes.”

Beyond the marketplace reform, officials hope there can be more innovation to improve outcomes and cut costs. One challenge locally has been lowering costs for the medical care of homeless populations, which still lean too heavily on expensive emergency services.

Giesting is encouraged by efforts to coordinate housing services with health care: Stabilizing the overall living conditions for people can be as essential to their health as a stop in the doctor’s office.

Other fixes — encouraging teamwork among health providers, changing the fee-for-service model of payment for health care to one based on outcomes — should create a better and more efficient system, long-term, she said.

There’s ample room to improve the ACA in other ways, Giesting said — assuming there’s the political will in Washington, D.C., to do so.

Peterson was similarly bullish on Hawaii’s health-care future.

“I think that we’re beginning to reach the tipping point,” she said. “We’re getting a lot more entities across the board — commercial, Medicare, Medicaid — all thinking about how we can do this differently.

“But we’re still at the early stages of it in the sense that there’s no one set model yet that’s emerged, that says, ‘This is the best way, this is how we should orient things.’”