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Sunday, April 6, 2014
Hawaii to be First State to Dump Obamacare Health Exchange?
By Andrew Walden @ 9:26 PM :: 7602 Views :: Health Care

by Andrew Walden

Obamacare is an expansion of Medicaid plus an individual mandate to buy insurance.  But in a state like Hawaii, which starts out with one of the nation’s highest percentages of insured individuals, Obamacare is mostly an expansion of Medicaid—backed by 906 pages of law and tens of thousands of pages of federal regulations

Now, after wasting $205M federal tax dollars, and signing up only 7,861 people, Hawaii is stuck with a Health Connector costing $15M per year to operate and a client base which Rep Colleen Hanabusa estimates at a paltry 33,000.  The National Review called it, “Fixing What Wasn’t Broken,” explaining:

In Hawaii, Obamacare has disrupted a health-coverage system that had seen 98 percent of the population insured before the recession. Now lawmakers are scrambling to fix the state’s health-insurance exchange, which is fast on its way to insolvency. But the financial fix is likely to result in even higher health-coverage costs for Hawaiians.

Now the people who so eagerly created this mess are seeking an exemption for the state—and pointing fingers at each other.  HNN April 1, 2014 reports:

On Tuesday, Governor Neil Abercrombie told Hawaii News Now that execution was fundamentally flawed by a Legislature decision to set up a nonprofit.

The governor said, "I never thought having a nonprofit corporation was an efficient way to do it."...

The governor said, "They don't have the same capacity as we do, say to determine Medicaid eligibility and follow through with it. He added that, "The existing non-profit corporation probably needs to morph into an extension of what we already do very, very well."

The governor plans to push for a waiver, that could, for instance, give the departments of Health, and Human Services broader range to facilitate insurance for residents. He said, "I think in retrospect if we simply allowed the Department of Health and Department of Human Services to run it through Medicaid, and added personnel I think we probably could have registered more."

Has Abercrombie forgotten his October, 2010 call to dump the Prepaid Health Care Act?  No.  Abercrombie remains committed to destroying Prepaid and replacing it with a single-payer monopoly government insurance system, so that medical care can be provided with the same smiling efficiency as all other State services.  The March 9, 2014 Star-Advertiser explains:

The stumbling of the Hawaii Health Connector, the online health insurance marketplace, could open the door for the state to consider replacing it with a single-payer system for health insurance, an option Gov. Neil Abercrombie favors.

"A single-payer system is one of several options in achieving universal health care coverage, which is the ultimate goal," Gov. Neil Abercrombie said in a statement to the Honolulu Star-Advertiser. The single-payer option was the only one listed by Abercrombie when asked what might take the place of the Connector....

"There are a few states that have been thinking single-payer all along," said Frances Miller, a visiting professor at the University of Hawaii William S. Richardson School of Law, who teaches health care regulation and finance at Boston University. "The more this whole thing gets to be a mess the exchange business the more it looks like an attractive option. You hear all the time that Abercrombie's interested in single-payer."...

A single-payer system would mean Hawaii's 1974 Prepaid Health Care Act, which requires employers to provide insurance coverage to full-time workers, a practice that has worked to insure the bulk of the population, would no longer be needed.

"If we do go down the road of universal health care, whether it's single-payer or some other form, you probably won't need the Prepaid Health Care Act because we'll find an alternative way to cover every single life," said Blake Oshiro, the governor's deputy chief of staff. "He (Abercrombie) really wants to see us moving down the road to universal coverage."...

Abercrombie’s single payer comments drew a reaction from Beth Giesting, the Governor’s Coordinator for Healthcare transformation who complained to the March 30, 2014 Star-Advertiser that, “The concept of ‘universal coverage’ is often confused with the concept of a ‘single payer’ system.”  While diplomatically neglecting to point out that her boss was the source of the ‘confusion’, Giesting added her voice to the long list of perpetrators now calling for Hawaii to be exempted from Obamacare:

some of the requirements for the ACA insurance exchange which in our state is the nonprofit Hawaii Health Connector were not compatible with our small but advanced marketplace.

We are actively looking at the opportunities available to us through a waiver of some of the requirements in the ACA.

Starting in 2017, the law allows the state the flexibility to receive an innovation waiver to pursue alternate strategies....some of the requirements for the ACA insurance exchange which in our state is the nonprofit Hawaii Health Connector were not compatible with our small but advanced marketplace.

We are actively looking at the opportunities available to us through a waiver of some of the requirements in the ACA.

Starting in 2017, the law allows the state the flexibility to receive an innovation waiver to pursue alternate strategies to ensure all residents have access to high-quality, affordable health insurance.

This would require Hawaii to devise a plan that ensures coverage is at least as good, affordable and available as it is under the ACA.

In addition, any waiver developed would have to be presented to the public for comment, and the state Legislature would have to explicitly approve all provisions.

Participating in the House Oversight Committee investigation into the failure of Hawaii’s state exchange, April 3, 2014, Tom Matsuda, Interim Director of the Health Connector and Rep Colleen Hanabusa both said they now want Hawaii exempted.  KHON reports:

Matsuda said during the hearing. “The issue for us, on the revenue side, is that because of the Prepaid Health Care Act, virtually all small businesses in the state already have insurance for their employees, so there’s very little incentive for them to leave a system that they’ve been accustomed to for almost 40 years. So I think it’s incumbent on us, looking at that marketplace reality, to try to reduce the cost of the operations of our system as much as possible.”

“I believe we need to look at other ways to immediately address the fundamental issue of how the Affordable Care Act can work with our Prepaid Health Care Act,” Rep. Hanabusa said. “I have long said that we need to make maximum use of the exemptions the ACA makes available to Hawaii. I do not believe the Hawaii Health Connector has pursued those exemptions effectively, and that is something I hope they will address immediately.”

Matsuda says he is looking to apply for an exemption from the ACA under Section 1332, which provides for State Innovation Waivers, but that will not be available until 2017.

“While it has been estimated that Hawaii has 100,000 residents without insurance, the expansion in Medicaid coverage will only leave about 33,000 eligible for coverage under the Connector,” Rep. Hanabusa said. “But even if every one of those residents signs up for insurance through the Connector, it cannot sustain itself, and Mr. Matsuda acknowledged today that the Hawaii Health Connector will never be financially sustainable under the current model.”

Not to be outdone by the politicians, Hawaii newspaper editorial boards are climbing on the exemption bandwagon almost as quickly as they climbed onto the Obamacare bandwagon.  A Maui News editorial, March 13, 2014, points out:

One could forcefully argue that Hawaii's decades-old Prepaid Healthcare Act made the exchange unnecessary here. A tweak or two might have provided insurance for the 4,500 or so who have signed up for insurance through the Connector.  

The Star-Advertiser March 2, 2014, opined, “Don't spend state funds on Connector” and explained:

Last week's candid presentation by the agency's interim executive director, Tom Matsuda, laid bare an even more fundamental problem with the whole setup. Matsuda made official what many people long suspected: There is simply no way this private nonprofit can stay afloat financially without a major bailout by Hawaii taxpayers.

And that should not be allowed by state lawmakers, because it would merely be throwing good money after bad. That, Matsuda told legislators, is because Hawaii has a far lower percentage of people lacking health insurance than most other states. That's an excellent condition, all thanks to our Prepaid Health Care Act.

As a result, he said, the islands simply lack the market of potential customers to make the Connector agency sustainable as it was originally planned, through small fees assessed on each enrollment processed through the exchange. And with only 4,467 people signed up, the revenue shortfall can't be overcome.

The state Senate's proposal, which would financially float the agency by assessing a fee on all insurance holders statewide, should be summarily rejected at the state Capitol. The problem with exchang-es in states that aren't well served by them is one the federal government will have to solve….

» Hawaii's senators and representatives should start networking with other states struggling with insurance exchanges. Together they should push hard for an amendment that would allow a limited opt-out as soon as possible.

The Affordable Care Act (ACA) does include a provision for state waivers, but those don't become an option before 2017. This date needs to be pushed up as early as possible. Even if the federal funds can be used past this year, Hawaii can't keep this agency running as is beyond 2015.

» Whether Hawaii needs an exchange at all is in doubt, and congressional leaders need to collaborate with state lawmakers on ways to shrink the whole Connector footprint.

A revelation on Thursday makes this discussion pertinent. The ACA was designed to make insurance discounts available only on policies purchased through online exchanges, such as the Connector. However, the Obama administration last week quietly issued a fix by announcing that in states that have experienced technical problems with the websites, some consumers can get the discounts on plans purchased outside the exchange.

This is essentially an admission that elaborate online exchanges haven't worked in many places — like Hawaii — and ultimately may not be needed at all. A simplified version of the Connector website, one that provides some information but relays shoppers to the carriers for purchasing, would certainly suffice.


Flashback 2010: Health Insurance? No need: Abercrombie promises to dump Prepaid Health Care Act

Hawaii Obamacare leaders were warning: “We’re not Going to Have Any Health Care”

Email chain revealed Hawaii Obamacare leaders debating “Inevitable Failure”

Open Letter: Hawaii MDs Challenge “Severely Dysfunctional” Medicaid Program


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