Insurance CEO: Shut down Hawaii health exchange


HONOLULU — The chief executive of Hawaii’s largest health insurance company is calling on Hawaii to shut down its beleaguered health insurance exchange, which was set up as part of President Barack Obama’s signature health care law.

Michael Gold, president and CEO of Hawaii Medical Services Association, says the state shouldn’t keep spending money on the Hawaii Health Connector, a system that he says is financially unsustainable and does not work.

“I think there’s an alternative that Hawaii needs to pursue immediately,” Gold said in an interview with The Associated Press.

Hawaii should ask the federal government for an exception to the part of the Affordable Care Act that requires states to set up and run their own insurance exchanges, Gold said. He thinks businesses should buy approved plans directly from insurance companies, as they have done in the past. Individuals would do the same or the federal government could take over that part of the exchange, he said.

“We have to get this done for 2015 and not continue to invest money in the Connector, and not continue to build an infrastructure that’s not needed here,” Gold said.

Lawmakers on Friday were outraged at Gold’s assertion that the state hasn’t already pursued flexibility from federal requirements. Rep. Angus McKelvey of West Maui said they sought waivers from the federal government and were told they had to wait until 2017.

“We tried. We aggressively pursued that,” McKelvey said. “The federal government says there’s only one route to go.”

The state is already pursuing ways to streamline the exchange by removing it as the middleman between employers and insurers, and seeking waivers from the federal government, said Beth Giesting, health care transformation coordinator for Gov. Neil Abercrombie.

“It is a simplified role for the Connector, rather than no role for the Connector,” Geisting said.

The Legislature passed a bill setting up a task force to pursue the waiver.

Sherry Menor-McNamara, chairwoman of the Hawaii Health Connector, said lawmakers and exchange officials have been talking about making the exchange more responsive and efficient.

“We would encourage the entire community to continue to have the conversation now that the Legislature has acted to support the Connector through 2015 and created an innovation task force,” she said.

The waiver won’t be available until 2017, and Gold thinks that’s too long to wait.

The rollout of Hawaii’s health exchange was delayed and plagued with technical problems. The Connector was awarded more than $200 million in federal funds. It has used about $100 million. It signed up 9,217 individuals, plus 628 employees and dependents. To date, the Connector has raised only $40,350 in user fees, according to Nathan Hokama, the exchange’s spokesman.

The exchange has to make deep cuts and renegotiate contracts to survive, Tom Matsuda, interim director of the Hawaii Health Connector, has said. Lawmakers sent a bill approving $1.5 million in state support — far less than what the exchange asked for — to Gov. Neil Abercrombie.

Gold said trying to sustain the exchange is the wrong approach because it would cost the public too much, either through fees on insurance companies or taxes.

“The real question is how do you, in a sense, get out from under the Connector, and use the assets that Hawaii has already to get to the aims of the Affordable Care Act?” Gold said.

Hawaii already had a relatively low number of uninsured people because of its Prepaid Health Care Act, which requires employers to provide subsidized insurance to employees. Because of that 1974 law, Hawaii can argue it was already meeting the goals of the Affordable Care Act, Gold said.

Gold said insurance companies can manage tax credits, one part of the exchange that had big problems during open enrollment.

Hawaii Medical Services Association serves nearly 733,000 members, said spokesman Floyd Takeuchi. The company also is on the Board of Directors for the Hawaii Health Connector, and in that role participated in building the exchange. But the Legislature passed a bill last week that directs the Connector to remove insurance companies from its board.