Health exchange board needs to be accountable to public

Just over two years ago, President Barack Obama invoked the word “reform” no fewer than a dozen times when he signed the Patient Protection and Affordable Care Act — a historic shifting from a system inordinately shaped by profit-driven insurance companies, to one in which the consumer is paramount.

Now Hawaii — a state with a reputation of being at the forefront of health care — seems headed down a course that runs counter to that ambition and is symptomatic of what ails our political system: an aversion to opening up governmental processes to public scrutiny and participation in dealing with high stakes public policy issues.

At issue is an 11-member board that will design and administer a health insurance exchange. The exchange, called the Hawaii Health Connector, is the cornerstone of the new health law, a competitive online marketplace from which residents can select the insurance plan they want. The consumer benefits from the lower costs competition should bring.

There’s a lot of money involved. According to AARP, a minimum of 100,000 residents may be uninsured, representing a market value conservatively estimated at $300 million and as much as $400 million. That’s a big pot of money for insurers.

So, it’s no small matter how the exchange is set up and who sits on the board. And therein lies the problem.

The Hawaii Health Connector is being created as a private nonprofit company, which allows the board to operate outside the state Sunshine Law and the state Ethics Law. Hawaii is currently the only state that has established an exchange as a nonprofit (Colorado, which some point to as a private nonprofit, describes itself as a “public entity”). Hawaii’s board, as a consequence, will be able to set benchmark benefits — essentially determining which health plans will be offered — without consumers knowing how or why decisions were reached.
The state Office of Information Practices, which oversees our open government law, said in a recent opinion: “It is clear … that the Connector is a nonprofit entity and not part of state government. It is undisputed that the Connector’s board of directors is not a board subject to the Sunshine law.”

This is made all the more egregious because of Gov. Neil Abercrombie’s nominations to the Connector board. Three of them are insurers with a direct financial stake in the outcome: the Hawaii Medical Service Association, Kaiser Permanente Hawaii and Hawaii Dental Service. There are federal rules requiring a nonprofit to have conflict-of-interest guidelines and ethics provisions; however, it’s the board that gets to write them. In short, Hawaii’s nonprofit board is self-governing. It’s a situation that threatens to shut out the public and consumers.

From the perspective of principle and pocketbook, this is unwise — and inevitably erodes the public trust and fuels persistent questions about conflicts-of-interest, real and imagined. Representatives for consumers and open government have raised the issue and proposed amendments, including having insurers serve in an advisory capacity only. Nonetheless, the Senate Commerce and Consumer Protection Committee, and then the full Senate, ignored the protest and moved ahead with approving insurance industry nominees.

The potent combination of insurance industry dominance of the board and a nonprofit company not bound by government rules is a prescription for problems. Where’s the accountability? Where’s the transparency?

With a lot of money at stake in these health exchanges, most other states have taken the common sense approach, barring insurers and others with potential conflicts from playing major roles. At most, they should be advisers or assume minority capacities.

Choice and competition will be critical to the success of a health exchange. The public has a right to demand that the Legislature and administration make changes, with a clear eye toward the greater goal: to ensure all children and adults in Hawaii will have the security of health insurance, at an affordable price. Opening up the process to public participation and protecting the public interest is the best means of advancing that goal.

There’s nothing like sunshine and fresh air to cure what ails the body politic. They’re just what the doctor ordered.