Hawaii: (sigh) HI Health Connector about to bite the dust??

Hat Tip To: 
Sabrina Corlette

For months now, the ACA state exchanges in small states like Rhode Island, Vermont and Hawaii have been struggling mightily with either funding issues (RI) or both funding and technical problems (VT & HI). Most of my own focus has been on the 2 northeastern states.

Today, however (thanks to Sabrina Corlette for the heads' up), the HI Health Connector has apparently skipped ahead a few chapters and concluded that due to their inability to convince the state legislature to pony up more cash (they were originally seeking $10 million but only $2 million was approved), they're gonna have to close up shop:

May 09--The Hawaii Health Connector has prepared a contingency plan to shut down operations by Sept. 30 after lawmakers failed to pass legislation to keep the state's troubled Obamacare insurance exchange afloat.

The plan, obtained by the Honolulu Star-Advertiser, states the Connector will cease new enrollments Friday, discontinue outreach services May 31 and transfer its technology to the state by Sept. 30. The Connector's workforce will be completely eliminated by Feb. 28. The exchange has 32 employees, 29 temporary staff and 12 full-time contractors.

This development wasn't completely unexpected. Part of the problem appears to be that the Federal Government is holding onto around $70 million in development grants:

Gov. David Ige's administration is negotiating with the federal government to release grant money to avoid the closure of Hawaii's online marketplace, designed to provide subsidized coverage to residents with incomes too high to qualify for Medicaid, the government health insurance program for low-income residents.

...The Connector was awarded $204.3 million in federal grants to build and operate the online marketplace. All but about $70 million of the federal grant money has been spent. The federal government's restriction on the remaining funds is affecting the Connector's ability to improve its technology, which has been a problem for users since its inception in October 2013.

It sounds to me like this contingency plan is partially designed as an attempt to pressure the feds into releasing the other $70M. Plus, they apparently had to submit such a plan by today regardless of whether they end up having to follow through with it or not:

Under the contingency plan, Connector functions would be transferred to the state so that the roughly 37,000 enrolled on the exchange would not lose their coverage. However, residents would have to re-enroll in healthcare.gov to ensure coverage next year.

...The federal government has required the state submit its contingency plan to move to healthcare.gov no later than Monday. The estimated cost of migrating to healthcare.gov this year is about $30 million.

On the other hand, the timing of this couldn't be worse, coming just 6 weeks before the King v. Burwell SCOTUS decision is expected to come down. What's basically being described here is the same move that Nevada and Oregon made for 2015: Dropping their own exchange and moving to Healthcare.Gov.

As I've said before, I personally have no problem whatsoever with some or all of the state exchanges making the move to HC.gov if they have to...as long as the King plaintiffs are shot down and federal subsidies can continue for states such as Oregon, Nevada, New Mexico and (presumably) Hawaii.

However, making this decision before the King decision is announced makes zero sense (and yes, I realize they may not have been able to hold off any longer).

One other odd thing: I keep seeing this "37,000 enrolled" number being tossed around...which is actually higher than the 35,000 figure I was confused by 3 weeks ago.

According to the official ASPE report from March, the actual number of 2015 QHP enrollees via the HI exchange was just 12,625 as of late February...which is pretty much what I was expecting this year (around a 50% increase over 2014). There's only a few explanations for this difference, none of which make much sense:

  • 1. HHS Dept. screwed up and left out about 2/3 of Hawaii's QHP enrollees. Highly unlikely.
  • 2. The HI exchange is blobbing together QHPs with Medicaid enrollees. This seems unlikely since one of the specific technical problems appears to be that the exchange doesn't integrate with the state Medicaid system.
  • 3. The HI exchange is counting cumulative enrollments since October 2013, which they've done in the past and which would be incredibily stupid if true. That would be like judging, say, Ford Motors 2015 sales by counting every automobile they've every sold since the company was founded.

Anyway, stay tuned...if OR/NV/NM are in the clear, then this could very well be a good solution for Hawaii as well...but if not, it's gonna get even uglier...