As many benefit brokers and advisers across the U.S. wrestle with and question their level of involvement in the Affordable Care Act’s public health insurance exchanges — there are those who advertise Obamacare help on local TV, others who are uncertain about getting licensed altogether and everyone in between — there’s one state where brokers have their hands tied and can’t do anything.

In Hawaii, the exchange “did not use brokers or agents to assist customers with their first open enrollment period from October 2013 to March 2014,” according to a spokeswoman for the state-run marketplace, referred to as Health Connector. Local benefit brokers say the reason they’re blocked is complicated, but has to do with the exchange board not providing compensation for agents who enroll individuals or small businesses and a health law that was on the books before the ACA went into effect, amongst other things.

No compensation

“The staff of the Connector itself, they wanted the use of the brokers, but the board of directors [of the exchange] did not — they didn’t view it as a necessity,” says Davis Kobayashi, broker and president at Advantage Insurance Services Inc. in Honolulu and member of the Hawaii Association of Health Underwriters. “And on the board sits HMSA [Hawaii Medical Services Association, a Blue Cross Blue Shield carrier], they’re a prominent player in Hawaii. Their recommendation was no — the exchange doesn’t need agents and brokers, they only add to the end cost for the consumer.”

An exchange spokeswoman did not return an EBA request for comment on why brokers were not involved in enrollment.

Kobayashi says there is no broker and agent representation on the board of directors. He and his colleague, Joni Wilson, a broker at Employee Benefit Consulting LLC also in Honolulu, have been lobbying the exchange board for broker compensation for more than a year. Wilson explains that because HMSA has about 75% market share in the whole state and doesn’t compensate brokers for plans off the exchange either, it’s been a tough project.

Kobayashi and Wilson’s message is that brokers could really help Hawaii’s population with the marketplace. “If you look at the make-up of the consumers who enrolled on the individual plans on the exchange, 40% of the people signed up for the bronze plan, which is the lowest plan,” Kobayashi says. “That should only be 5% of the population, because it’s a $5,000 deductible and if you need health insurance, imagine those people realizing they need to pay the $5,000 out of pocket.” Until there’s compensation, however, the two brokers say it’s just not possible for them to enroll any one or any company on the exchange because they have a livelihood to uphold.

The Prepaid Health Care Act

While Kobayashi and Wilson say they’re determined to try and work with the ACA because it is the law, they question whether it really fits with the health care coverage climate in Hawaii. In 1974, the state passed a health law called the Prepaid Health Care Act, in which almost all employers must provide health insurance for any employee working more than 20 hours for four or more consecutive weeks. Before the ACA went into effect, the state had 92% of its citizens insured, Kobayashi says.

“There are articles in the local paper suggesting the connector should not be here,” Wilson adds. “I believe it’s good for individuals who have never had any insurance, but if you work there’s a good chance you’re covered.” The two brokers explain that the state hopes to apply for an ACA waiver because of Hawaii’s unique achievements but the way the ACA is written, this couldn’t possibly go into effect until 2017 and that’s if it’s accepted.

The market that both Kobayashi and Wilson work in separately is almost entirely group benefits. The brokerage market there is small because even with the Prepaid Health Care Act requiring employer-sponsored plans, that’s still only about 400,000 individuals once those provided government, military, Medicare or Medicaid benefits are factored out.

The Hawaii Association of Health Underwriters only has about 65 members. Wilson says 80% are independent brokers and the rest are carrier representatives.


Despite a willing broker market to help enroll the only 8% of Hawaiians who didn’t have health insurance in 2013, the state obtained grant money to have two navigator organizations help enroll people in the Health Connector.

Kobayashi was dismayed when on March 4, well into the open enrollment 2014 season, the Honolulu Star Advertiser reported that two navigator groups had signed a $675,000 contract to help educate Hawaiians on enrollment. “Why would you give someone a grant when open enrollment ends at the end of March?” he asks. Prior to that in August 2013 the Star Advertiser also reported that other community organizations had received “$6.7 million in grants … to hire 191 assisters to help consumers and small businesses on each island.”

Kobayashi says monies should be redirected to fund a broker compensation program so that people who know about insurance can educate uninsured Hawaiians.

The Hawaii Health Connector reported that on April 30, 9,785 people had signed up for coverage via the exchange.

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