State announces it will shut down its ACA insurance exchange

As states grow increasingly concerned over the future of Obamacare, one has decided to abandon its marketplace due to low revenue.

Insurance News


As the future of the Affordable Care Act subsidies is considered by the Supreme Court, state regulators have grown increasingly concerned over future health insurance affordability. The case, King v. Burwell, will only affect subsidies for residents of states that did not establish their own online marketplaces – yet in one state, even the presence of a state-run marketplace hasn’t kept financial woes at bay.

Hawaii Governor David Ige announced this week that the state will abandon Hawaii Health Connector, its state-run health insurance exchange, due to its inability to “generate sufficient revenues to sustain operations.”

“The viability of state health insurance exchanges has been a challenge across the country,” Ige said. “Particularly in small states due to insufficient numbers of uninsured residents.”

Hawaii will revert back to the federal marketplace, and nearly 40,000 enrollees will be served by The federal site will be accessed through the existing state exchange, and the system will be similar to those used in Nevada, New Mexico and Oregon.

The move comes after the Centers for Medicaid and Medicare Services informed the non-profit exchange that federal funds were no longer available to support its long-term operations.

Hawaii Health Connector has suffered from technological issues and low enrollment numbers since its inception and rollout two years ago, despite a state investment of $130 million. In October 2013, Hawaii held the dubious honor of hosting the worst-performing exchange website.

The site frustrated producers for a month, as it did not allow agents and shoppers to compare health plan options at the time of testing. Instead, it directed visitors to contact the Hawaii Health Connector for information on subsidy eligibility and plan options.

“It was a failed project,” state Senator Sam Slom told the Honolulu Star-Advertiser. “It was a boondoggle from the very beginning, and our residents deserve better than that.”

Hawaii already has one of the lowest uninsured rates in the country, thanks to the state’s Prepaid Healthcare Act of 1974, which requires businesses to offer health insurance to employees who work more than 20 hours a week.

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