Lawmakers: No chance of ACA waiver before 2017

State lawmakers expressed dismay Friday over Hawaii Medical Service Association chief Michael Gold’s contention this week that Hawaii should seek an immediate exemption from the federal Affordable Care Act’s requirement for the state to have an online health insurance exchange.

West Maui Rep. Angus McKelvey, chairman of the House Consumer Protection and Commerce Committee, said Gold’s suggestion to dismantle the Hawai’i Health Care Connector exchange is “disingenuous at best and misleading at worst.”

West and South Maui Sen. Roz Baker, chairwoman of the Senate Commerce and Consumer Protection Committee, said she found Gold’s remarks “both misinformed and annoying.”

In an interview at The Maui News on Wednesday, Gold said that the connector doesn’t fit Hawaii because most of its residents already have health insurance because of the state’s 1974 Prepaid Health Care Act. That law requires employers to provide subsidized insurance to employees.

Gold maintained that, because of Hawaii’s law, the state can make an argument to the federal government that it already has been meeting the goals of President Barack Obama’s health care law.

McKelvey took exception to Gold’s contention that it’s possible – now – to seek an exemption from the federal requirement for the state to have a health insurance exchange.

“The assertion that these waivers exist and that the Legislature did not pursue them is simply not true,” he said. “We explored all of these avenues. We aggressively explored them. We can’t do it now.”

McKelvey said state lawmakers wrote to Hawaii’s congressional delegation Feb. 4 to ask for an immediate waiver, “and we were told in no uncertain terms that we would not be able to secure them. We also drafted a House resolution asking for a waiver and were told again that we could not.”

The Affordable Care Act doesn’t allow waivers, called the Innovation Waiver Process, until 2017.

HMSA spokesman Floyd Takeuchi said Gold doesn’t believe it would be “easy or necessarily successful to pursue a waiver in 2014, but he believes that if we don’t try – and the governor would be the one to ask the federal government for a waiver – we will lose valuable time and spend public funds that shouldn’t be spent on a system to support the Shop, which isn’t needed.”

“Shop” refers to the exchange’s small business health options program. Gold believes that Shop is unnecessary because Hawaii’s health insurance law covers those people.

Gold “believes the waiver should be pursued for the Shop, not the individual market,” Takeuchi said via email Friday. “Hawaii’s comprehensive Prepaid Law means that we already have the scope of coverage for employees of businesses that’s called for in the Affordable Care Act. The individual market can be handled by a more limited Hawai’i Health Connector, possibly the federal exchange, or perhaps an innovative way that doesn’t require an exchange and has individuals go directly to health plan providers.”

Launched Oct. 1, Hawaii’s online health insurance exchange has been troubled by delays and technical problems. The connector was awarded more than $200 million in federal funds, and it has used about $100 million.

Baker acknowledged that the connector has had a difficult beginning, but she said it’s starting to make a difference for individuals and employers who, for the first time, are able to shop and compare health plans in real time online. And people who had been denied coverage before for pre-existing health conditions can’t be excluded from a health plan, she said.

“That’s something enormously valuable to employers and individuals,” she said. “That’s something they couldn’t do before . . . I think we’re on the right path.”

Baker said that if Hawaii’s health exchange were dismantled, a federally facilitated exchange would be put in its place. That would jeopardize Hawaii’s prepaid health insurance law, which she called “one of the pillars of the health insurance landscape in Hawaii.”

Hawaii needed to get an exemption from the federal government to keep its prepaid health insurance system in place, she said. Hawaii’s system has led to the state having the lowest number of uninsured residents in any state in the country, she added.

“We’ve enjoyed very low insured rates because anybody who’s employed is required to be provided with health insurance,” Baker said.

Takeuchi said Gold doesn’t believe that seeking a waiver from the business exchange would negatively impact Hawaii’s Prepaid Health Care Act.

“The issue for Hawaii is that the ACA’s mandate for an online insurance exchange for businesses to purchase health plans for employees is not needed in Hawaii, where we’ve had the Hawaii Prepaid Health Care Act since the early 1970s,” he said.

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

“It is a simplified role for the connector, rather than no role for the connector,” Giesting said.

The Legislature also has advanced to the governor a bill setting up a task force to pursue the waiver, but not until 2017.

As of early this month, the connector had 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.

HMSA and Kaiser Permanente Hawaii are the only two health insurers participating in the exchange.

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

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

HMSA, the state’s largest insurer, serves nearly 733,000 members. The company also is on the board of directors for the Hawai’i 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.

“It’s very funny how when this bill removing insurers is going to the governor that all of a sudden now, HMSA, who sat on this exchange, is calling for its dismantle,” McKelvey said.

* The Associated Press contributed to this report. Brian Perry can be reached at