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In March, the state of Hawaii was notified that it was out of compliance with the Affordable Care Act because its Health Connector – the state-run insurance exchange - wasn’t financially stable at the outset of the year. Plagued by technical difficulties, a lack of enrollment, and higher-than-expected costs, Hawaii’s exchange is in danger of becoming the latest to fail, which would force the state to default to the federal exchange website.
Already, the federal government has restricted grant money to Hawaii and will be taking over the state exchange’s IT functions to allow residents to enroll in coverage through the Federal marketplace. Governor David Ige is negotiating with the Federal Government to release the grant money and avoid closure of the Hawaii marketplace.
However, there is a strong incentive for Hawaii to now transition to the federal insurance exchange system since it would save the state money. Hawaii Certified Public Accountant Greg Baker is quoted as saying that each enrollee costs the Federal Government $6,666. In order for the Hawaii healthcare Exchange to move all of its operations and functions over to the federal government, taxpayers will be forced to fork over $30 million because Hawaii residents will have to re-enroll in the Federal exchange.
The CEO of Hawaii Medical Services Association doesn’t want the state to continue spending exorbitant amounts of money on the health care exchange, since Hawaii has already spent a staggering $205 million on the program and now claims they need more funding to sustain it. If the Center for Medicaid and Medicare services does not accept the governor’s plan, Hawaii might also risk losing $1 billion in Federal matching funds for Medicaid.
Enrollment in the Connector also never reached 70,000, which was the minimum target goal to remain financially solvent. The state initially spent $74 million on a contract with CGI to build and maintain their web portal. However, in the first year alone enrollment only reached 8,500 (a cost of $23,899 per person) and was ranked the most costly exchange in the nation. Former Governor Neil Abercrombie and the Hawaii Health Connector’s board and administration had initially been working under the assumption that at least 100,000 people would sign up.
The Hawaii Healthcare Exchange is just one more example in a long line of state exchange failures. California, Massachusetts, and Oregon have all been suffering large expenses and infrastructure issues with their exchanges, many of which have come to light recently. The huge tab that taxpayers will be forced to bear for switching to the federal exchange will bring large costs. However, Hawaii does not want a state-run exchange either because taxpayers will still have to pay for that in the form of Federal grants.