Hawaii ponders: It might be time to start taxing insurers for not participating in our ObamaCare exchange

Five months and approaching a coupla’ hundred million dollars in federal grants later, Hawaii still hasn’t made much progress on mending their terrifically botched ObamaCare exchange website, and the clock is ticking. With barely a few weeks to go until the open enrollment period ends (for now — I have very little faith that His Highness won’t issue another royal decree somehow extending that deadline, too), the state government is entering panic mode over their super-low enrollment figures and their definitive lack of a long-term financing plan for the exchange, which needs to be self-sustaining by the start of 2015. As of mid-February, only about 4,400 people were signed up for health insurance through ObamaCare — a rather conspicuous dip from the hundred thousand people Gov. Neil Abercrombie once predicted would hop to it:

The exchange had originally planned to stay afloat by collecting a 2% fee on every plan sold through the exchange, but with the slow pace of enrollment and changing federal rules — delaying the employer mandate and allowing canceled plans to continue — Interim Director Tom Matsuda said Wednesday that the math simply does not add up. …

Of the 100,000 uninsured in Hawaii, about half are expected to be eligible for Medicaid — meaning just 50,000 people would buy individual plans through the Health Connector under the best-case scenario. And while Hawaii hoped to sell thousands of plans through the exchange’s small-business marketplace, Matsuda said so few small businesses are eligible for tax credits that officials are simply not seeing the demand. “What people can get on the Connector versus outside the Connector is the same, so there isn’t really a strong incentive for small employers to use the Connector,” he said.

Further complicating matters, only two insurers offer plans on Hawaii’s exchange, so many companies are continuing to rely on their longtime brokers (who, having essentially been cut out of the process, have no incentive to help Hawaiians buy plans on the exchange).

Hence, Hawaiian legislators’ latest proposal to cover their bums includes a plan to start charging a “fee” to insurers that decided not to participate in the state’s exchange.

The fee would help prop up the financially troubled Hawaii Health Connector, which could run out of money to pay its bills by year’s end.

“This is not something we want to do,” said Rep. Angus McKelvey, chairman of the House Consumer Protection and Commerce Committee. “It’s federally mandated that we have to have our exchanges be sustainable.”

The unspecified fee would be charged by the state insurance commissioner until mid-2018, based on the number of people the carrier insures. …

The new insurance fee is part of a flurry of House proposals that were rolled into one overarching bill (HB 2529) now being considered by the Senate. …

A “fee,” i.e., slapping a tax on any insurer (and, subsequently, its customers) that decided it was not in their company’s interest to participate in ObamaCare just yet. As the LA Times piece above notes, there are only two insurers currently participating in Hawaii’s exchange — meaning that, if the proposal passes, everybody else is going to have to pay to subsidize ObamaCare’s poor technical, logistical, and financial functionality in the state. And here I was, thinking that ObamaCare was supposed to improve the market and lower everybody’s costs, or something?