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'Huge changes' likely for troubled exchange

By Kristen Consillio, The Honolulu Star-Advertiser
McClatchy-Tribune Information Services

Aug. 17--The future of the Hawaii Health Connector is in jeopardy with the impending departure of one of its strongest supporters in Gov. Neil Abercrombie and the decision by the state's largest medical insurer to pull back from the troubled online marketplace.

The three top gubernatorial candidates, vying to replace the defeated Abercrombie, agree the state should radically revise the Connector or shut it down.

Republican Duke Aiona and Democrat David Ige have been critical of the state's role in creating its own health insurance exchange, saying they would try to fix the mistakes of Abercrombie. Former Honolulu Mayor Mufi Hannemann, the Hawaii Independent Party candidate, said the state should "intensify our efforts to opt out."

"The Health Connector's gone either way," said Colin Moore, University of Hawaii assistant professor of political science. "It will either be restructured to the point of being entirely unrecognizable or eliminated. Certainly there's going to be huge changes."

Abercrombie, who lost his bid for re-election on Aug. 9, was the first governor in the nation to embrace the health insurance exchange. His early backing gave a boost to his friend and political ally, President Barack Obama, and the Affordable Care Act, often called Obamacare.

Now the criticism of the Connector is unanimous among Abercrombie's potential successors.

"There are provisions in the ACA that make absolutely no sense in Hawaii, and I don't know why we would adopt them," Ige said in an interview. "Our Hawaii Health Connector received a $205 million grant from the federal government, but has been a disaster," the state senator added on his website. "There are better alternatives to covering Hawaii's uninsured residents."

Ige said he would work with the Connector board and Legislature to seek other options to cover the roughly 75,000 currently uninsured -- or 5.5 percent of the population.

Aiona echoed the senator's sentiments, saying the online marketplace created by Obamacare has been "an unfortunate mishap for our state."

"We cannot afford more of the same, especially at the cost of $15 million per year (the original amount the Connector said it would need to operate next year)," Aiona said, adding that he would work directly with local insurers to find ways to cover the uninsured.

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Hannemann said the Connector program was "driven by politics" and that federal dollars used to build the ailing system is "still accountable to Hawaii's people because they pay federal taxes, too."

"If our health care system's not broke, don't fix it," he said. "The politicization of what was already a sound, functioning health care system has not benefited the people of Hawaii."

Adding momentum to the criticism of the Connector, the state's dominant health insurer, Hawaii Medical Service Association, said Friday that it will no longer participate on the Connector's small-business exchange. That left Kaiser Permanente Hawaii as the sole health plan for sale on the marketplace where qualified small businesses can get tax credits to lower the cost of coverage.

HMSA said it will continue to offer plans to individuals on the exchange.

The insurer said it committed an "extraordinary amount of human resources" -- nearly 8,000 hours of staff time -- to helping the Connector with technical and customer service problems that are ongoing.

"It's become clear that Hawaii's unique circumstances make it unnecessary to have the SHOP (Small Business Health Options Program) exchange," Michael Gold, president and chief executive officer of HMSA, said in a statement. He added that Hawaii's 1974 Prepaid Healthcare Act, which mandates employers provide insurance for full-time workers, "makes the SHOP an extra layer of cost and bureaucracy for businesses and health insurers."

HMSA also said it will pay $65.4 million in ACA fees this year alone.

HMSA joins several smaller Hawaii insurers --including UHA (University Health Alliance), Hawaii Medical Assurance Association and Family Health Hawaii -- which declined to be part of the Connector from the start because of the significant costs.

The next governor will be left in a quandary when he inherits the problematic exchange and the task of finding a way to cover the remaining uninsured in Hawaii, said Frances Miller, who teaches health care regulation and finance at Boston University and the University of Hawaii.

"You can have all the rhetoric in the world about what a crappy system it is and how come we had to pay so much, but the fact of the matter is you have to afford a way for these people to get coverage," she said. "It's not a problem that's going to go away and not a problem that's amenable to simple solutions."

From its inception, the exchange has been a black eye for the state and Abercrombie. It 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 and despite receiving more than $200 million in federal grants, appealed for state funds to survive. Lawmakers appropriated $1.5 million for operations next year, one-third of its funding request.

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What's more, Connector interim executive director Tom Matsuda is expected to exit the post before the next enrollment period begins on Nov. 15. Matsuda replaced Coral Andrews, the original executive director who abruptly resigned shortly after the bungled launch of the exchange. The Connector board is scheduled to select its third executive director in October.

A less supportive governor coupled with HMSA's decision to pull out of the SHOP exchange could be the final nail in the coffin for the troubled Connector, Moore said.

"This is the death blow to the exchange," the UH assistant professor said. "If Abercrombie had stayed, maybe he would've tried to patch things up. I don't think the exchange has any friends left in town."

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(c)2014 The Honolulu Star-Advertiser

Visit The Honolulu Star-Advertiser at www.staradvertiser.com

Distributed by MCT Information Services

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