$200 million Hawaii Obamacare exchange bites the dust

After months on life support, the Hawaii Obamacare exchange will shutter operations due to the site being economically unsustainable.

The state sought more cash from the federal government - after spending more than $200 million - but when that option fell through, Hawaii had little choice but to close it down.

Fox News:

The once-highly praised Hawaii Health Connector has been “unable to generate sufficient revenues to sustain operations,” Gov. David Ige’s office said in a statement. The federal Centers for Medicaid and Medicare Services (CMS) informed the exchange last week that federal funds were no longer available to support long-term operations.

“The state is working with the Connector and CMS to determine what functions can be transitioned to state oversight to ensure compliance with the Affordable Care Act (ACA) by the next Open Enrollment in November 2015,” Ige said.

Ige said that Hawaii will maintain a Supported State-based Marketplace in which the state would provide local customer support.

Grant funds had been restricted in March after the exchange told officials it was not in compliance with the Affordable Care Act, commonly known as ObamaCare, due to fiscal instability and tech issues.

The shutdown comes after federal taxpayers dropped more than $200 million into the exchange, which critics called a waste of taxpayer money.


"The $200 million was a complete waste of tax dollars that could have been used for much more productive efforts," Reg Baker, a well-known CPA in Hawaii who for many years was the chief financial officer for the health insurance plan, HMAA, told FoxNews.com last month.

While many of the state's Democrats praised the ObamaCare exchange when it launched in October 2013, it was riddled with trouble from the start. The web portal never worked properly despite the state spending $74 million on a contract with CGI to build and maintain it. 

The exchange experienced tremendous staff turnover, with three executive directors appointed in two years. Enrollment reached just over 8,500 in the first year, and as a result, Hawaii was ranked the most costly exchange in the nation at more than $23,899 per person.

Enrollment never reached the 300,000 number then-Gov. Neil Abercrombie, a Democrat, enthusiastically predicted at the opening press conference launching the Connector. The enrollment number also never hit 70,000, the minimum needed to stay financially solvent. At its peak, enrollment reached 37,000, a fraction of the state's 1.4 million people. Hawaii's uninsured population, at 8 percent when the exchange opened, dropped just 2 percent.

Maryland, Vermont, Minnesota, and a couple of other state exchanges are also emitting their death rattle. The question that should be asked - and won't be - is who do we hold responsible for wasting billions in taxpayer dollars? Shouldn't someone, or several people go to jail? It isn't just incompetent management that led to this disaster, although that's a factor that figures prominently in the debacle. The real culprit is reality and the refusal of politicians and bureaucrats at every level to face up to the responsibility for overselling a program that never had a chance of working in the first place.

At most, these exchanges would remain economically viable for 2 or 3 years. But what happens when the numbers of uninsured drop substantially? Where will the new revenue come from?

Now you know why GOP governors who refused to set up Obamacare exchanges are now seen as the smart ones. The sites are a black hole for taxpayer dollars and anyone grounded in the reality of health insurance economics knew it.

The sooner these exchanges are shut down, the better for the consumer and the taxpayer.


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