The Hawaiian insurance marketplace has not met its goal for new signups. As a result, the state could be transferring operations to the federal Healthcare.gov website and marketplace in 2016.
States Given Options
As part of the Affordable Care Act, states were given the option of running their insurance marketplace or using the federal marketplace. The federal government spent $5 billion subsidizing state efforts to open and maintain these state insurance marketplaces. Twelve states, including Hawaii, California, and the District of Colombia decided to open a state-specific marketplace, instead of operating through the federal marketplace.
However, as many as half of these state marketplaces are losing money. This is a particular problem in smaller states, where there is a smaller pool of uninsured residents.
Hawaii’s Marketplace Issues
Hawaii was awarded about $205 million in federal grants to operate its insurance marketplace. It has spent a little over half that, around $139 million, to enroll 8,200 customers in 2015. This is well below the projected enrollment. As a result, the Hawaii state marketplace is unable to sustain itself. At the moment, the state is planning on turning over operations to the federal marketplace for 2016.
Other states are considering combining operations, such as call centers, with several other states to save costs. These operations are labor intensive, and by splitting the cost between several states, it is hoped that expenses will be lowered enough to keep the individual state marketplaces open.
A potential alternative is to cut subsidies, which would increase the portion new customers would have to pay. This would increase the cost of healthcare, and make insurance less attractive. This is particularly true of younger people, who remain the largest group of uninsured. Lack of insurance is a major factor in bankruptcy, as medical bills can mount up quickly.
While individual states have had a hard time meeting their sign-up goals, some can support their marketplaces. Covered California fell short of projections, but is still considered a viable business opportunity.
A recent decision by the Supreme Court allows states to turn the operation of their individual marketplaces over to the federal government. There was some worry that if the decision had gone the other way, the Federal government would be forced to pump money into failing state marketplaces to keep them operational.
However, it is now more likely that the insurance marketplaces will become more centralized. There will be a central Federal marketplace and individual state marketplaces that share operations and costs. This could mean good news for the Hawaii healthcare marketplace and the citizens as well.