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Saturday, July 14, 2012
Kaiser Study: Hawaii Obamacare Exchange to Pay Insurers $973/month
By Andrew Walden @ 11:01 PM :: 9692 Views :: Energy, Environment, National News, Ethics

by Andrew Walden

Will the State of Hawaii see reductions in General Fund spending from implementing Governor Neil Abercrombie’s Obamacare Health Connector? 

Pacific Business News July 3 would have readers believe “Hawaii's Medicaid spending will drop under health-care law."
The New York Times July 2 informs readers that Hawaii is one of only four states in which expanded federal funding could result in lowered State expenditures even as Medicaid enrollment grows. Citing an “indispensable” Kaiser Family Foundation study, the Times points out that 2014-2019 Obamacare will soak California for nearly $3B and Texas for $2.6B.  But Hawaii, Massachusetts, Vermont and Maine—states distinguished by their already broad Medicaid eligibility—are slated to come out ahead. For Hawaii the bonus is $28M.
But there is a dirty little secret.  Hawaii will save money only if the State holds back on enrollment outreach. The General Fund saves money only if ‘universal coverage’ isn’t universal--and recent experience shows the most expensive patients may be the easiest to avoid reaching out to. 
The Kaiser study, Medicaid Coverage and Spending in Health Reform explains, “the ultimate reach of the program will depend heavily on both federal and state actions.” Hawaii saves $28M under the “Standard Participation Scenario” which “assumes 57% participation among the newly eligible uninsured and lower participation across other coverage groups.”
“Standard Participation” would enroll an additional 84,130 Hawaii residents in Medicaid. Of these only 42,381 would be previously uninsured. “Other coverage groups” include another 41,749 are projected to be kicked off their existing private insurance to be placed at the tender mercies of Hawaii’s corruptpublic health clinics and decrepit HHSC hospitals—among the only providers willing to accept Medicaid patients.
To achieve this, the federal government will borrow another $2.999B and spend it in Hawaii for a net State-Federal expenditure of $2.971B. This yields a cost of $70,102 per previously uninsured person. Over six years, this works out to an Obamacare insurance premium of $973.63 per month per previously uninsured person. For a family of four, the Obamacare premium is $3894.56. If persons kicked off private insurance are included, the premium drops to $490.48 per person per month--$1961.91 for a family of four. Of course these are people who currently have less costly insurance and superior medical care to that available under Medicaid.
HMSA currently sells Individual Care HMO Plans at rates from $81 to $234 per month and Family Care Plans from $245 to $703 per month.  The discrepancy may explain why Hawaii’s insurers were so eager to grab seats on Abercrombie’s Hawaii Health Connector Board.
But PBN and the NYT neglect to mention Kaiser’s “Enhanced Outreach Scenario” in which “a more aggressive outreach and enrollment campaign” produces 75% participation. If the State works at it, the study’s authors say Hawaii could soak itself for a cool $58M--turning a $28M gain into a loss of $30M.
“Enhanced Outreach” would enroll an additional 110,203 Hawaii residents in Medicaid. Of these, only 64,167 would be newly insured. 46,036 would lose their existing coverage before being shunted onto Medicaid.
Based on these numbers, coverage for every additional percent of the “newly eligible uninsured” costs the State $3.2M. To achieve universal 100% coverage—the proclaimed goal of Obamacare, the State would in theory have to come up with an additional $80M, yielding $110M in new spending.

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