A number of state-run PPACA health insurance exchanges have been struggling over the last year-plus. In fact, state-run health insurance exchanges in Oregon, Maryland, New Mexico, and Nevada have either permanently shut down their operations or have done so temporarily and are contemplating some attempts to relaunch them. Colorado, Minnesota and Vermont are now also considering abandoning their state programs.

One of the victims of these failures and potential failures in these states is the Small Business Health Options Program (SHOP), a program that was designed as part of the PPACA to help small businesses access affordable health insurance for their employees.

In late May, Hawaii's health insurance exchange became the latest one to bite the dust, taking its SHOP with it. The federal Centers for Medicare and Medicaid Services (CMMS) began restricting grant funds to the state's Health Connector two months ago, after telling state officials that the program was out of compliance with the Affordable Care Act due to fiscal instability and ongoing IT issues. One of these IT issues involved SHOP. According to a May 15 article published by Fox News, "The Connector's Small Business Health Options Program, targeted at small business owners, sent garbled data to insurers, preventing them from signing up small businesses and their employees."

In mid-May, Hawaii's Health Connector began making contingency plans in case the system did shut down entirely (which it did a week later), to transition operations to the federal government. The plan directed that no new enrollees would be accepted by the local exchange after May 15. In addition, outreach services were set to conclude May 31, and the 73-member workforce will be laid off by February 28, 2016.

The Fox News article noted that the exchange was riddled with trouble from the start. "The web portal never worked properly, despite the state spending $74 million on a contract to build and maintain it. The exchange experienced tremendous staff turnover, with three executive directors appointed in two years."

In addition, enrollment reached just over 8,500 in the first year, and, as a result, the Hawaii exchange ended up being ranked as the most costly in the nation, at almost $24,000 per person.

A May 8 article appearing the The Washington Times, prior to the actual shutdown, noted that a federal takeover of Hawaii's Health Connector could also threaten the state Prepaid Health Care Act, a law that requires employers to subsidize health insurance. "Currently, the feds have acknowledged that, on the SHOP side, they wouldn't be able to accommodate the Prepaid Health Care Act plans," said Gorton Ito, Hawaii's insurance commissioner.

Correction: An earlier version of this article erroneously stated that Massachusetts had permanently or temporarily shut down their health insurance exchanges.

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PPACA mandated state insurance exchanges struggling

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