HONOLULU — As the Hawaii Health Connector opens its virtual doors for enrollment, the new head of the battered health exchange is trying to regain the community’s trust.
Jeffrey Kissel, the former CEO of Hawaii Gas who took over running the exchange just one month ago, acknowledges it will be a substantial challenge to turn the state-run exchange into a streamlined, financially sustainable operation.
But while Kissel isn’t expecting customers to immediately flock to the health exchange, he believes he can gradually win back customers after fixing the myriad problems that plagued the operation throughout its first year.
“It all hinges on our ability to provide a good enrollment experience so that we can attract more people and more businesses,” Kissel said. “We have to earn that right.”
Open enrollment in the Hawaii Health Connector begins Saturday.
When Hawaii’s exchange launched in October 2013, enrollment was delayed for two weeks because of technical problems that made it impossible to buy plans on the website. Some would-be customers got fed up and bought plans directly from insurers instead.
Later, the state’s largest health insurer pulled out of the employer side of the exchange, citing ongoing technical difficulties that cost the company time and money and leaving small businesses with only one insurer — Kaiser Permanente — to buy from on the exchange.
Enrollment fell far short of projections, reaching about 10,000 people instead of the 100,000 to 200,000 some public officials predicted. The enterprise only collected about $121,000 in issuer fees instead of the $1 million it anticipated in its budget. That left officials asking for money from the state, which granted $1.5 million for the current fiscal year.
Despite that infusion, the exchange is still heading for a deficit of $1.8 million in 2015.
If the exchange is able to enroll 130,000 people over the next four years — adding about 30,000 per year — it could break even between fiscal year 2018 and 2019. But under that plan, which critics call unrealistic, the entity still faces deficits of $7.7 million in 2016, $6.7 million in 2017 and $3.4 million in 2018.
If the plan works, the Connector would have a surplus of $1.2 million in fiscal year 2019, after amassing a cumulative deficit of $20 million, according to a sustainability forecast Kissel compiled immediately after starting the job. Lawmakers had long sought such a document.
“My second day I presented that to the board, because nobody was focusing on that, and the numbers were all here,” Kissel said.
But critics who lived through inflated projections and disappointing sign-ups last year called the assumption that the Connector could add 30,000 people per year unrealistic.
“Unless they have some new strategy for signups, what is it that they’re going to dangle in front of people to sign up?” asked Republican state Sen. Sam Slom.
To improve the enrollment experience and win back customers, Kissel increased the number of “kokua” — the federally funded helpers who assist enrollees through the process — from 50 to 200. The exchange has also run technical tests to anticipate solutions to website problems.
At the same time, the exchange reduced its full-time staff to 34 employees from 53. Kissel is earning $150,000 a year.
Kissel hopes to add Pacific Islanders who are legal residents of Hawaii as customers, a population he estimates at 5,000 to 10,000 people. He also hopes to encourage some of Hawaii’s 32,000 small businesses to enroll employees and enjoy tax benefits available through the Connector. The Connector delivered about $12 million in tax incentives so far, he said.
He is hoping to earn back the business of Hawaii Medical Service Association, the insurer that left the small business side of the exchange.
“I really believe that we need to earn their business back,” Kissel said. “They are a great institution.”
But the tax incentives offered to small businesses aren’t enough to draw in that amount of additional customers, Slom said.
“They were smaller in amount and took longer to kick in than was advertised,” Slom said.
The Hawaii Health Connector was awarded $205 million in federal grants. To date, it has spent or allocated roughly $130 million, leaving about $70 million unspent. Those remaining funds can’t be used to offset deficits because according to federal rules they were intended for startup costs, not ongoing operations.
“I’m aware this is an enormous challenge,” Kissel said. “My career has been built around helping companies that need to survive challenges.”
