The Honolulu Star-Advertiser Vicki Viotti column

Sept. 05--Hawaii Medical Service Association, as the state's largest health-insurance company, has always been a titanic presence in the Hawaii health care industry, and as its president and CEO, Michael Gold always had a voice that carried.

So when HMSA announced it was leaving the Small-business Health Options Plan (SHOP) section of the Hawaii Health Connector health-insurance exchange, the news, not surprisingly, reverberated.

In the weeks since the announcement, Gold and his executive team have moved on a new part of the HMSA agenda with the launch of its Blue Zones Project, an effort to promote preventive health initiatives across Hawaii's residential, school and business communities. The aim, he said, is to get people to make many small changes in their diets and activities, nudging them toward a healthier lifestyle.

It's an issue that counts heavily with Gold, who with his wife, Esme, are past the child-rearing period of their lives and have a lot more leisure time. But Gold, 67, lost 35 pounds a few years back, confronting the shorter life spans of his mother and brother, who died at 49 and 54, respectively. Now he spends at least some of his free morning hours running and walking, often at Ala Moana Beach Park.

Still, the implementation of the Affordable Care Act has occupied the lion's share of his time in the past few years. Quitting SHOP added fuel to the fire of criticism aimed at the Connector, which has faced technical issues with its exchange.

Gold acknowledged that ACA requires the exchanges to enable comparison shopping, but added that this doesn't necessarily mean an online marketplace developed for $200 million in federal grants -- as Hawaii's Connector was. The federal Department of Health and Human Services should allow flexibility, he said.

The rationale from officials, he said, is that the Connector needs fees from SHOP to finance the core of the mission: enrolling Hawaii's relatively small uninsured population.

"I would say you need to find a better way to do it," he said. "And there are better ways to do it, less expensive ways to do it."

QUESTION: Wasn't the theory that tax credits would be the incentive for businesses to enroll in the Connector?

ANSWER: The theory behind it was this, that across the United States, except for Hawaii and probably Massachusetts, small employers had a very difficult time buying health insurance for themselves and their employees.

There's reasons for that. It's not an attractive market to insurance companies. It's small groups of people, it's hard to market to them. There's all the normal reasons that you get. ... You get adverse selection: If the business owner wants it, he'll buy it for him and his employees because he wants it. In many cases it's not a good market, across the country. ...

That's not the case in Hawaii. We've had the Prepaid Health Care Act since 1974, and every employer, even if you only have one person, every single one has to have health insurance. So we didn't have a small employer market problem the way the rest of the country did. And Massachusetts doesn't, either.

Q: Well, who are the uninsured here?

A: The uninsured here are those individuals who don't have access to health insurance through an employer. So they're unemployed, or they can be employed and work very short hours.

And there are some people in Hawaii, not a great number, but there are some people in Hawaii who work three jobs at 12 hours a week each, so they probably wouldn't have health insurance. That's not a big number.

The actual market for the people who are uninsured here is relatively small. It's hard to say how much it is. If you said going into this that Hawaii had somewhere between 8 and 12 percent of the market uninsured, ... many of whom were swept up in the new Medicaid, ... there's 70,000 people left as the market here.

We were almost at 90 percent insurance. That's extraordinarily high. ...

So there really isn't a market here.

Q: Why did we not anticipate this?

A: Well, everybody wanted to do the right thing. And I think the vast majority of people would push for universal health care coverage.

And there was a very strong feeling that we could set up an exchange, a Hawaii Health Connector that would get at those 70,000 to 120,000, those 100,000 or so people who didn't have health insurance.

The way the Hawaii Health Connector started out, it didn't start out targeting those 100,000 people. It started out because it was going to build this very large structure -- an IT structure, an organizational structure -- it was going to build this big thing. It overbuilt it -- it's hard to impute motives or understand what drives people sometimes -- partly because they got $200 million. ...

It didn't need to build anything that large because a piece of that -- not all of it, because you still have to have a Connector of some sort -- was aimed at enrolling these small businesses who already had insurance.

To me, this is so circular. They targeted enrolling small businesses so that they could collect fees from these small businesses so they could support the Connector, so they could enroll more small businesses, when these small businesses already had exactly the same coverage they were going to get. And there was a very strong feeling that we could set up an exchange, a Hawaii Health Connector that would get at those 70,000. ...

Q: Did this issue come up in the Connector meetings?

A: I was not at the Connector meetings, so I don't know if it came up.

Q: But surely your person came back and told you, right?

A: I'd say our people argued this along the way. That's one reason I find it so odd that people think the solution to the problem is to keep the health carriers off the exchange. The health carriers were the ones who understood what was going on, because we were there.

But as people were going through it, they really thought there is just the allure of $200 million to spend, that they're going to spend. And they thought it would work....

Now, as it's turned out, as you look across the country, it's a very complex system that you have to build, if you're going to do the full-blown Health Connector. I think the argument for Hawaii is that we don't need that; we could do it in several other different ways that you wouldn't need to build something as big as that.

And the main tenet of all those is: Let the people who want to enroll enroll directly with the carriers the way they always did before.

Q: The Connector's chief, Tom Matsuda, say the law provides for waivers from the rules only after 2017. How do you address that?

A: I do hear that. Let me say this: Maybe I am a lot more either optimistic or aggressive or assertive, or however you might look at it. There are ways to read the law in a more expansive way than to read it literally.

And there are ways to read that law that would allow Hawaii to at least ask for, under a reasonable argument, to get an exemption right now.

Now, they wouldn't call it an exemption, because "exemption" is defined, "waiver" is defined as a certain thing. But you could get a transitional policy that they have the right and authority to do. You could do something right now. I think Mr. Matsuda reads it very literally. ...

I think Hawaii needs to fight for itself. ... The position that's best for Hawaii is not to keep this thing going, and keep putting money in it, into something that doesn't work. ...

And people are willing to go out and fight for Hawaii -- the congressional delegation is willing to go out and fight for Hawaii. We believe the governor's office is. It would be great if the Connector would say, "We're with the governor's office, and we're with the congressional delegation, and everybody running for the office of governor, and would go out and fight for Hawaii."

We may not win. You're dealing with the federal government and you may not win. But it's not an unreasonable argument that we have, and to say that, "Oh, we were told no, and we're just going to sit back and do nothing." (Laughs.)

Q: Is there actual legal language that can be read a certain way?

A: There's language in the law you could read, and maybe some people would say it's a stretch, that says if you had an existing exchange before the law was passed, then you could use that existing exchange. ... My understanding was that little section was really put in there for Massachusetts. ... There is a way, to me, you could make an argument that the Hawaii Prepaid Health Care Act did everything it was supposed to do, and functioned as an exchange.

They (federal officials) understand that it does not fit Hawaii. Now, they also say, "We have to send it to our lawyers," and I understand that. But if you don't ask, you don't get it. ...

Q: Why didn't HMSA stay in the individual market on the Connector?

A: There are individuals out there who need health insurance. ... It is an attractive option for individuals to get coverage. The other part of the law -- the small-group side, the idea was to get tax credits -- on the individual side, they help subsidize that premium so individuals could afford to have it. That's a good part of the law. And that's not touched by the Hawaii Prepaid Health Care Act. ...

That's a way to get to universal coverage. And we want to be part of that. We want Hawaii to have universal coverage. So the individual portion of the exchange helps us get to universal coverage. The SHOP portion of the exchange doesn't move us forward one inch, because we've already covered those people.

Before the exchanges went into effect, Hawaii was either No. 1 or No. 2 in the level of coverage we had. We were probably 2, behind Massachusetts, but it was the both of us up there. I saw a report after the exchange went into effect: We're No. 4. We've fallen backwards.

Q: Why?

A: Because we spent our time advertising that small groups could get coverage when they already had coverage, and the Hawaii Health Connector didn't go after those people that didn't have coverage. It's not only a waste of money, it's a betrayal of what was supposed to be happening.

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