Obama’s Home State To Shut Down State-Based Obamacare Exchange Over Lack of Funds

By Brittany M. Hughes | May 12, 2015 | 11:51am EDT

(CNSNews.com) -- President Barack Obama’s home state of Hawaii is shutting down its state-based health care exchange, the Hawaii Health Connector (HHC), due to incurring debts and the unwillingness of state legislators to put more taxpayer money into the struggling operation, the Honolulu Star-Advertiser reported Saturday.

Established in 2011, the non-profit organization is Hawaii’s state-based health exchange for the President’s Affordable Care Act, or Obamacare. There are currently about 37,000 Hawaiians enrolled in health care plans through the exchange, far short of the roughly 70,000 needed to raise enough money to sustain it, the article reports.

Officials with the exchange released a report to its board of directors on Friday declaring that the state-based marketplace simply does not have the money to continue operations, the article stated.

"Now that it is clear that the state will not provide sufficient support for the Hawaii Health Connector's operations through fiscal year 2016 (ending June 30, 2016), the Connector can no longer operate in a manner that would cause it to incur additional debts or other obligations for which it is unable to pay," the report read, according to the article.

The HHC will halt all new enrollments on Friday, May 15, the article reported. The organization will also discontinue outreach services on May 31 and officially transfer to a temporary state-run system by Sept. 30. The organization’s 32 current employees, 29 temporary staff, and 12 full-time contractors will all lose their jobs by Feb. 28 of next year.

To date, the Hawaii Health Connector has received $204.3 million in federal grants to build and sustain the exchange, of which it has spent all but $70 million, according to reports.

The HHC also only received $2 million of the $5.4 million it had requested from the state legislature last Tuesday, the Star-Advertiser explained in an article published on May 8. The state government’s decision not to fulfill the HHC’s total request followed previous unsuccessful proposals for the state to back about $28 million in loans or bonds, the article added.

According to reports, the federal government told the HHC in March that the exchange was out of compliance with Obamacare because it was not financially self-sustainable. According to the new federal law, all state-based health care exchanges were required to secure sufficient funding to be self-sustainable by 2015.

The federal government then declared its intentions to take over the state-based marketplace if it could not secure the funds it needed to operate from the state government, the Star-Advertiser reported back in April. At that time, HHC Executive Director Jeff Kissel was asking for between $9 million and $10 million in state funding to keep the exchange up and running, the article stated.

In addition to the cost of transferring policyholders over to the federal health care system – estimated to be around $30 million, according to the Star-Advertiser – some state legislators are also reportedly worried that a federal takeover of the state’s health insurance system could weaken Hawaii’s Prepaid Health Care Act.

Enacted in 1974, the law requires employers in Hawaii to offer health insurance coverage to employees who work at least 20 hours per week, whereas Obamacare sets a 30-hour-per-week threshold. If the federal law preempts the 40-year-old state requirements, employees working less than 30 hours per week could lose their coverage, some Hawaii lawmakers say.

"I can't quite figure out what the deal is because the federal exchange doesn't really have an excellent track record. And if we were to migrate even pieces of our exchange to the feds, we put our Prepaid Health Care Act at risk. I’m not willing to do that," said Sen. Rosalyn Baker (D-Maui), the Star-Advertiser reported.

According to the most recent data by the U.S. Census Bureau, Hawaii already had an uninsured rate of 6.7 in 2013, lower than any state besides Massachusetts.

Under a potential “contingency plan” currently in the works by Hawaii Gov. David Ige, Hawaiians enrolled in the current HHC exchange would be transferred to a federal grant-backed, state-run system for the remainder of the year to avoid losing coverage. They would then need to enroll in healthcare.gov next year during open enrollment.

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