The federal health reform law known as Obamacare aims to boost competition in the medical insurance market and drive down costs by making it easier for consumers to compare policies offered by different companies.
In most states consumers will be comparing policies from five or more carriers when their versions of a health connector, an online marketplace for medical insurance, goes live on Jan. 1, the Obama administration said Wednesday.
But not so in Hawaii.
The Hawaii Health Connector will have only two medical insurers, Hawaii Medical Service Association and Kaiser Permanente Hawaii.
"There's a lack of competition in the state of Hawaii, period," said Rick Budar, the Connector's chief marketing officer. "At this point, there are no other medical carriers that have submitted plans to the state. We are definitely trying to get more competition in the state. There are a number of carriers that have expressed interest. That's one of the missions: to create more competition and a level playing field. Through the ACA (Affordable Care Act) and the efforts of the Hawaii Health Connector, it may spur more competition moving forward. That is the hope."
Other insurers -- including University Health Alliance and Hawaii Medical Assurance Association -- have decided not to participate on the exchange, some citing the difficulty in competing with the largest health plans in the state and uncertainty as to the size of the potential market.
Hawaii has relatively few health insurance companies in part because for-profit insurers are subject to a state premium tax, an issue that in 2010 drove Summerlin Life & Health Insurance Co. out of business here.
Without more competition, Hawaii consumers may find rates going up once the law takes effect.
HMSA executives have warned consumers of "rate shock" as the law rolls out next year because there will be a pent-up demand for medical services among people who haven't had health insurance, as well as fees for operating on the exchange -- costs that will be passed on in consumers' health plan rates.
The Patient Protection and Affordable Care Act requires states to set up health insurance exchanges that will match qualified uninsured individuals to subsidized health care plans. Open enrollment on the online marketplace starts Oct. 1 with the insurance coverage beginning on Jan. 1. All uninsured must sign up for insurance or pay a fine.
The exchange is envisioned as a transparent marketplace where health plans compete and consumers and businesses can compare and select medical coverage.
To date, Hawaii has received about $205 million from the federal government to build the exchange that could be used by as many as 100,000 uninsured residents, a new market valued at $300 million.
"Over time the opportunity of transparency and competition will attract more and more issuers into the marketplace," Mike Hash, director of the U.S. Department of Health & Human Services Office of Health Reform, said on a media conference call. "Across the country and in other markets, we've seen a very significant number of issuers coming into the individual and small group market for the very first time. It is an opportunity for shoppers to see exactly what offerings there are and compare them apples-to-apples and have the benefit of financial assistance. All of those factors make for an attractive market for issuers."
The Obama administration is touting the advantages of the law as the main start date draws closer.
Cecilia Munoz, director of the White House Domestic Policy Council, said that consumers faced "wildly uncertain costs" before the health care law and could potentially be denied coverage when they got sick.
"The reforms in the law will bring fairness to ensure that people who get sick can get the care that they need," she said. "We expect premiums will be more affordable through tax credits ... a reduction in uncompensated care, and people having coverage that will cover preventive services to keep them healthy."
The Obama administration issued state-by-state reports Wednesday on the benefits of the law, estimating that the 92 percent of Hawaii residents who already have health insurance will have more choices and stronger coverage.
The 8 percent, or 89,974, who don't may qualify for either tax credits or may be covered through Medicaid, said the U.S. Department of Health & Human Services.
For more information, go to HealthCare.gov. ___