State audit finds Hawaii Health Connector not sustainable

HONOLULU (HawaiiNewsNow) - The Hawaii Health Connector is not sustainable in its current form, so says the State Auditor's Office.

"Can we say that they've done a good job or that they've got the best bang for their buck, I don't think so" said Acting State Auditor Jan Yamane.

The report had two major findings; inadequate planning and improper procurement.

"No sustainability plan, no strategic plan. They worked on it, we saw it through the minutes of their meetings, but they never finished it" said Yamane on the lack of planning. "There's an awful lot of damning information in the procurement finding" she continued.

The audit states that the prior Executive Director, Coral Andrews, misused her authority and circumvented policies in hiring consultants, thereby eliminating open competition those policies were designed to ensure.

"So much of what they do isn't properly documented, so even if they tell us that they did it, they have nothing to show for how they did it, why they did it" noted Yamane.

Severance payments were also undocumented. Problems with the Connector extended beyond internal controls.

"The rate at which we received our documentation and other requests from the Connector delayed our work significantly" said Yamane.

Andrews resigned in December of 2013, just months after the ill-fated launch.

The lack of leadership, and a strategic plan, led the Auditor to find that the Connector is not sustainable in its current state.

Current Executive Director Jeffrey Kissel responded to the report in a statement, saying the problems have been fixed, saying in part:

"Strict controls on the procurement process are in place, and the relationship with certain contractors and service providers has either been terminated or revised".

The auditor's recommendations include restructuring and downsizing the Connector to ensure its viability.

The full audit can be found at: http://files.hawaii.gov/auditor/Reports/2015/15-01.pdf

The following is the Health Connector's statement in response to the audit, attributable to current Executive Director Jeffrey Kissel:

The audit acknowledges the Connector's pivotal role in protecting Hawai'i's regulatory control over its own health care policies in lieu of a federal system.

The audit findings detailed many of the challenges the Connector encountered during its first year of business. They included deficiencies in the planning process, procurement, and governance. The recommendations are reasonable and have been addressed."

The Management and Board of the Connector are working with the Auditor to make certain that the organization operates in a manner that assures compliance with applicable statutory and regulatory guidelines, and, is transparent and efficient as it continues to develop this important resource for the community.

In its response to the Audit, the Connector noted that since the State Auditor began working on its report in January 2014, numerous changes have been made to address the concerns contained in the audit. The Connector has completed a Strategic and Sustainability Plan focused on a specific mission, vision, and value proposition of "harmonizing the Affordable Care Act with the provisions of Hawaii's Prepaid Health Care Act of 1974," which was submitted to the Legislature on December 31, 2014, and made public on the Connector's website.

Strict controls on the procurement process are in place, and the relationship with certain contractors and service providers has either been terminated or revised. The Connector is also working closely with its Legislative Oversight Committee to ensure that it continues to improve its operations as enrollment increases and costs are reduced.

The Hawai'i Health Connector continues to enroll residents across the state in high quality, low cost health coverage. More than 16,500 residents have enrolled for health insurance through the Connector since October 2013. Open enrollment for individuals ends on February 15, 2015 for health coverage this year.

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