Hawaii lawmakers want private providers to subsidize Obamacare exchange

Hawaii Health Connector is Hawaii's Obamacare exchange
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Hawaii Health Connector sign ups still under one percent of Hawaii’s population.

BY MALIA ZIMMERMAN – HONOLULU — Lawmakers scrambling to keep the Hawaii Health Connector solvent are proposing a fee for private insurers who decline to take part in the local Obamacare exchange.

At least three of five private medical insurance providers, the state’s smaller insurance companies, have opted not to participate in the exchange during the first year. Insurance giants Kaiser Permanente and HMSA are part of the network.


“That’s not fair, of course,” said Rep. Bob McDermott, a member of the House health committee who voted against the proposal, House Bill 2529.

Adding a fee, he said, is a “blatant money grab” and would ultimately be passed on to the consumer.

“Everything we do here at the Capitol is a money grab,” McDermott said. “This whole Obamacare exchange is a disaster. What a mess.”

Supporters of House Bill 2529 say the proposed 2 percent fee is fair and the money is needed to ensure the exchange survives.

The Hawaii Health Connector received $204 million from the federal government to set up the exchange through 2014, and it’s supposed to be self-sustaining by 2015.

Because enrollment is so low the state is looking at other ways to subsidize the failed exchange, including state subsidies and additional fees on medical insurance providers.

The House leadership estimates the state needs $15 million to operate the exchange per year beginning in 2015; Senate President Donna Mercado Kim believes the figure is more in the $18 million to $24 million range. About half of the $204 million has been spent or allocated, exchange officials told lawmakers in a recent hearing.

Before its launch Oct. 1 Gov. Neil Abercrombie predicted “hundreds of thousands of people” in Hawaii would register for Obamacare. Hawaii has the nation’s lowest enrollment numbers, a U.S. Department of Health and Human Services report said last month.

The report says 4,467, people have signed up, but that number could be even lower because it’s not clear whether those people have paid for their insurance. The plan relies on a 2 percent sign-up fee from each medical insurance plan, but that hinges on as many as 300,000 people signing up.

Abercrombie has expressed support for Universal Healthcare.

“The Connector and state legislators are currently discussing sustainability options,” he said in a statement. “A single-payer system is one of several options in achieving universal health care coverage, which is the ultimate goal. We will pursue resolving issues with the Connector and its mission of insuring people without coverage in a timely way.”

Kim opposes a state takeover and points to the exorbitant cost for each Obamacare enrollee to taxpayers — $45,668.

Hawaii, Kim said, has had a successful health-care system since 1976, the Prepaid Healthcare Act, which requires business owners to offer insurance to employees who work more than 20 hours per week.

McDermott said Hawaii’s congressional delegation led him to believe it would get an exemption because the state law already requires businesses to pay for employee health care, and low-income residents benefit from subsidies. He said fellow lawmakers have told him Hawaii missed the deadline to register for the exemption and, in two years — after setting up the network and spending the millions of dollars the federal government allocated to the local exchange — Hawaii will apply for an exemption from the law.

“What a waste of $204 million,” McDermott said.

In addition to the cost per person, Kim has been critical of Montreal-based CGI Group Inc, which created Hawaii’s portal. The company got $53 million for the site, which for more than two weeks failed to work after it launched Oct. 1.

The site relaunched Oct. 15, but ongoing complaints include cumbersome technology, frequent crashes after forms are filled out and submitted, confusion over plan pricing and scrambled information transmitted to the health-care providers.

Reach Malia Zimmerman at Malia@hawaiireporter.com





  1. So it begs the question, Did Hawaii intentionally miss the exemption deadline in order to make the exchange a failure to further Abercrombie's single payer initiative or was it just another case of governmental bureaucratic incompetence?

  2. Isn't it bad enough that big government incompetence has increased the misery on every single person in this country and state? Now we have to pay for that mistake and people who bother no one will be forced to support a government created entity even though they choose not to participate. Why not bail on the state exchange and punt to the federal exchange. True we still pay for that piece of c_ _p but at least it won't blow a hole in the state budget. As for Abercrombie he was all in for Obamacare: his opinion on healthcare fixes has no credibility.

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