Highlight on Hawaii: Can a Turn to the Business Realm Cure the Aloha State’s Ailing Exchange?

The Hawaii Health Connector, the state’s Health Insurance Exchange, announced the appointment of its new executive director recently. Jeffrey Kissel, the former CEO of HawaiiGas, will become the Exchange’s third director within the last year when he replaces current interim director, Tom Matsuda. Besides leadership turnover, the Exchange in Hawaii has experienced several other issues since its creation in 2013, including funding and provider shortages. Unlike other Exchange directors, Kissel does not have a background in the health or insurance industry. So will this change be the cure for what ails the Hawaii Exchange as the upcoming enrollment season approaches? Moreover, to what extent have other state Exchanges’ successes or failure stemmed from leadership in those Exchanges?

Hawaii Health Connector

The first director of the Hawaii Exchange, Coral Andrews, resigned in 2013 following a delay in the opening of the website after the beginning of the initial open enrollment period under the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). In addition to that delay, in its first year of existence, the Exchange experienced enrollment numbers that were lower than expected. While Hawaii was awarded additional federal grant money through the end of 2015 to run the exchange, recently, its largest insurer, Hawaii Medical Service Association (HMSA) decided not to participate in the Small Business Health Options Program (SHOP) as of January of 2015. After this withdrawal, the Exchange will only be left with one insurer, Kaiser Permanente Hawaii.

According to Insurance News Net, “the Connector was hoping it would earn $320,000 in the first six months of operations from a [two] percent fee it collects on each insurance policy, but it took in only $40,350.” Other sources note that the Hawaiian Exchange has the highest cost per enrollee in the country.

Kissel

Unlike many of the other Exchange directors in states across the country, Kissel is not coming from the medical, health insurance, or even government fields. Instead, Kissel accepted the position as head of the Hawaii Health Connector after his early retirement as CEO of HawaiiGas. Previously, Kissel had a leadership role at URS, which is one of the largest engineering and construction companies in the world. Despite his inexperience in the subject matter, the Hawaii Exchange Board of Director Chairman, Clifford Alakai, asserted that Kissel was the “ideal person to lead the Connector forward for the long-term,” and that “his prior experience leading prominent and successful companies, as well as his drive and enthusiasm, will serve the Connector well to secure affordable health coverage for the residents of Hawaii.”

Other state experiences

While the state of Kentucky was praised with creating one of the best Exchanges in the county, others, such as Oregon, have experienced a laundry list of issues. Could leadership play a role in explaining these successes or failures? Carrie Banahan, the director of kynect, the Kentucky Exchange, and the former director of the state’s Office of Health Policy, was acknowledged and praised for building a simple and efficient website that appealed to Kentucky residents, many of whom were opposed to health care reform.

Oregon’s plagued Exchange hired a new director, Aaron Patnode, who was previously a manager for Kaiser Permanente and at Kaiser’s Sunnyside Medical Center emergency department. In June of 2014, Patnode took over the Exchange, which is currently at the center of a controversy over whether it should be dismantled. Cover Oregon, the Oregon Exchange, which never was able to provide residents with a portal to obtain coverage through, is also in the crossfires of litigation between the state and Oracle, the company that was hired to build the Exchange. Rocky King, Cover Oregon’s first director, who had also served as the director of the state’s high-risk insurance program was reportedly chosen for the position “in part for his relationships with the state’s insurers.”

Examples of leadership in Kentucky and Oregon exhibit the varying results that can come from veteran government or health leaders taking the reins in a state Exchange. Now, in Hawaii, a leader with no health, medical, or government experience will add another variable to the mysterious equation behind a successful Exchange. His failures or successes will be telling as to the proper path other ailing Exchanges may take in the future.