The Hawaii Health Connector hasn’t had a wealth of fans during its brief existence. A disastrous rollout in the fall of 2013 made it the subject of statewide ridicule, and by the end of that year, Executive Director Coral Andrews resigned amid enrollment numbers that were the lowest of any state exchange — a paltry 2,192.

The marketplace got a new executive director last year, Jeff Kissell, and when enrollment opened again in November, things were clearly different. A lousy website that had previously caused four out of every 10 potential enrollees to simply give up had been reworked and was now firing on all cylinders.

By this spring, when enrollment opened once again to accommodate stragglers eager to avoid an income tax fine for failing to have insurance, the Health Connector had already surpassed its fiscal year target of 30,000 sign-ups. Kissell said that total has now grown to 35,000 — a number Connector officials identified last year as the break-even point for sustainability.

Jeff Kissell, Executive Director of the Hawaii Health Connector speaks to lawmakers at hearing at the Capitol. 29 dec 2014. photograph Cory Lum/Civil Beat

Jeff Kissell, executive director of the Hawaii Health Connector, speaks to legislators on the path forward for the insurance exchange.

Cory Lum/Civil Beat

The Connector’s encouraging news is part of a national success story. By the fifth anniversary of the federal Affordable Care Act (ACA) last month, 21.3 million people had gained health care coverage. Earlier this week, the Gallup and Healthways organizations announced the national percentage of uninsured had dipped below 12 percent for the first time since the groups began tracking the statistic in 2008.

But despite the growing confidence sparked by its recent gains, the Health Connector still has obstacles to overcome. Creating such a marketplace is costly, with significant start-up expenses. Though the Connector expects to bring in $1 million in revenue this year, $2.8 million next and nearly $15 million annually by 2022, it essentially needs what entrepreneurs call “bridge funding” to cover costs over the next seven years as it moves incrementally toward self-sufficiency.

The House passed two Senate bills on Tuesday that will help ensure that long-term viability.

Senate Bill 1028 “attempts to harmonize” the ACA and the Hawaii Prepaid Health Care Act, which requires employers to provide insurance for employees working more than 30 hours a week. SB1028 mandates that the Connector only offer health plans that comply with the ACA’s requirements for adequacy. The bill would require insurers to contract only with health centers that meet federal standards “in relevant service areas to provide covered services.”

The bill further allows the Connector to begin offering benefits administration services on the open market. While the Hawaii Chamber of Commerce opposes the provision as unfair government competition against private businesses, that’s not entirely accurate: The Connector is a stand-alone non-profit, one of only two state exchanges nationally that aren’t nested within state agencies. Allowing the Connector to develop new revenue streams by offering its services in the marketplace is an innovation we support.

One of the most significant components of the bill is one that was removed before final passage. Previous versions of SB1028 approved the Connector to be able to issue up to $28 million in state-backed “debentures” over the next six years. The House removed that provision as part of negotiations between the Legislature and the governor to identify the best way to secure the bond financing.

Those discussions continue, and sources close to the conversation expect the bond funding to be reintroduced in conference committee, meeting the Connector’s bridge funding needs.

A second piece of legislation passed Tuesday, Senate Bill 1388, would allow the Connector to begin offering large group insurance plans — a significant source of new participation. Rep. Angus McKelvey, chair of the House Consumer Protection and Commerce committee, called that provision “the most critical piece of the bill as far as sustainability of the Connector is concerned.”

With both bills making their way toward conference and ultimately the governor’s desk, the Connector’s future continues to brighten. Quite a difference from six months ago, when enrollment numbers were small and headlines bleak, a point not lost on Kissell.

“We still have challenges in technology, as well as in earning our place in the community,” said Kissell. “I’m grateful for the progress we’ve made, but we’re committed to doing more so we can do better for the community.”

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