Hawaii's $205-million Obamacare exchange will shut down

Hawaii's state legislature has rejected legislation that would have given a $28-million infusion of cash to its troubled Obamacare insurance exchange, making it impossible for the website to operate after this year.

The exchange will stop taking new enrollees on Friday.

"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," Connector officials said in a report released Friday to the nonprofit's board of directors.

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.

"Staff reductions will commence immediately, with the executive director ( Jeff Kissel) exiting once the bulk of operational activities end," the report said. "If the state cannot facilitate an orderly transition, the Connector's operations will abruptly end, as the Connector does not have the resources to continue operations."

The state was notified in March that Hawaii was out of compliance with the Affordable Care Act, also known as Obamacare, because the Connector wasn't financially sustainable at the start of this year and wasn't integrated with the Medicaid system, which determines eligibility for subsidies and tax credits obtained through the exchange. The federal government subsequently restricted grant money to support the Connector and moved to take over its IT functions to allow residents to enroll in coverage through the federal marketplace,healthcare.gov.

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.

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.

Five other states – Minnesota, Maryland, Massachusetts, Vermont, and Oregon – have experienced massive problems with their Obamacare websites, ranging from balky features to less than expected enrollment numbers.  Eventually, it is expected that most of those sites will be folded into the national Healthcare.gov website, resulting in almost a billion dollars in taxpayer funds going down the drain.

It's a legitimate question to ask if any state exchange will be around in five years.  Cash-strapped states are less willing to pony up the money to subsidize these exchanges, as Hawaii demonstrated.  With 36 states refusing to open their own exchanges and the Supreme Court ready to deal a death blow to subsidies, the future of the Obamacare exchanges appears uncertain at best.

Hawaii's state legislature has rejected legislation that would have given a $28-million infusion of cash to its troubled Obamacare insurance exchange, making it impossible for the website to operate after this year.

The exchange will stop taking new enrollees on Friday.

"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," Connector officials said in a report released Friday to the nonprofit's board of directors.

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.

"Staff reductions will commence immediately, with the executive director ( Jeff Kissel) exiting once the bulk of operational activities end," the report said. "If the state cannot facilitate an orderly transition, the Connector's operations will abruptly end, as the Connector does not have the resources to continue operations."

The state was notified in March that Hawaii was out of compliance with the Affordable Care Act, also known as Obamacare, because the Connector wasn't financially sustainable at the start of this year and wasn't integrated with the Medicaid system, which determines eligibility for subsidies and tax credits obtained through the exchange. The federal government subsequently restricted grant money to support the Connector and moved to take over its IT functions to allow residents to enroll in coverage through the federal marketplace,healthcare.gov.

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.

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.

Five other states – Minnesota, Maryland, Massachusetts, Vermont, and Oregon – have experienced massive problems with their Obamacare websites, ranging from balky features to less than expected enrollment numbers.  Eventually, it is expected that most of those sites will be folded into the national Healthcare.gov website, resulting in almost a billion dollars in taxpayer funds going down the drain.

It's a legitimate question to ask if any state exchange will be around in five years.  Cash-strapped states are less willing to pony up the money to subsidize these exchanges, as Hawaii demonstrated.  With 36 states refusing to open their own exchanges and the Supreme Court ready to deal a death blow to subsidies, the future of the Obamacare exchanges appears uncertain at best.