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Hawaii health-exchange request to slow spending of federal funds denied

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HONOLULU — The head of Hawaii's troubled health connector said Friday that the federal government denied a request that would have improved its financial situation by allowing it to spend its money more slowly.

Officials from Hawaii Health Connector had asked for more time to spend what remains of about $205 million in federal funds, because most of the money has to be spent by the end of 2014. But the federal government denied the request, not just for Hawaii but for all the states that had asked, said Tom Matsuda, interim executive director of Hawaii Health Connector.

"It's obviously not the news we wanted to hear. But it's where things currently stand," Matsuda said at a meeting of the Connector's board of directors.

Hawaii Health Connector has spent roughly $100 million of federal funds so far, spokesman Bobby Lambrix said. It can't just draw down the remaining $105 million and save it for the future, because every expense has to be approved for specific purposes, and the money can't just be set aside for future operating expenses, he said.

Enrollment in the Connector has been much slower than anticipated, so revenues have been low. Nearly 5,400 people had bought individual insurance through the exchange by March 15, up by about 400 from a week ago. Software problems and a delay in open enrollment led some people to skip the exchange altogether and buy plans directly from insurance companies to meet the March 31 federal deadline to enroll in coverage.

The Hawaii Legislature has been considering giving money to the Connector if the nonprofit agency can't come up with a plan to sustain itself, and Matsuda has said he will present lawmakers with a sustainability plan in the next few weeks.

On Thursday, state Sen. Sam Slom, the lone Republican in the chamber, challenged the Hawaii Department of Health to produce documents that detail the Connector's grant applications and explain how it has spent its money. He said the Connector was flawed fatally from the beginning with an unrealistic business plan. If he didn't get the documents, he would ask the U.S. Government Accountability Office to investigate the Hawaii exchange, he said.

"The Connector takes any assertions about transparency extremely seriously," Matsuda said in a statement. "Since the beginning of the legislative session, the Hawaii Health Connector has been committed to providing any and all relevant information to the Legislature so that they can make informed choices. With only 10 days left until the end of open enrollment, we hope that Sen. Slom will put politics aside and join us in helping Hawaii's uninsured get coverage."

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