History of the Compacts and associated health policy

In 1947, the United Nations granted the USA a trusteeship over several Pacific Island nations.12 The trusteeship granted the right to use lands for military purposes including the establishment of bases and fortifications in exchange for the obligation to promote independent governance, economic and educational advancement, and social goods including health protection. In the ensuing decades, the USA availed itself of its military rights under the trusteeship and undertook extensive testing of nuclear weapons, most notably in the Marshall Islands.13 As the trusteeship ended, a Compact of Free Association was formalised between the USA and each of the Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau.14 The Compacts allow for continued US military presence, include provisions that allowed COFA residents to reside and work in the USA without a visa, and appropriated funds for improving healthcare and education in the island nations.

Over 56 000 COFA migrants now live in the USA.15 Most are employed, and rates of participation in the US military are high.16 17 Transpacific migration continues to increase, as Pacific Islanders face the impact of climate change and seek opportunities in the USA.18 In table 1, we use the 2015–2019 American Community Survey to provide basic demographic and economic statistics on COFA migrants in the state of Hawaii.19 20 Compared with the rest of the state, COFA migrants are much younger (mean age 25 vs 40 years). Mean income of COFA migrants is also substantially lower, and this is not only because of their younger average age: even within age categories, COFA migrants earn much less. For example, average annual income for COFA migrants aged 20–34 is $17 800, compared with $31 700 for the rest of the population. COFA migrants aged between 35 and 49 earn $24 400, less than half of the average among the rest of the population ($55 000).

In 1996, the US Personal Responsibility and Work Opportunity Act removed federal Medicaid funding for COFA residents by what is largely believed to be a drafting error.21 22 The state of Hawaii continued to fund healthcare for COFA migrants via its Medicaid managed care programme, Med-QUEST (Quality care, Universal access, Efficient utilization, Stabilizing costs, and Transforming care experiences).

Basic health Hawaii, racism and discrimination

Following the global financial crisis of 2007–2008, the Governor of Hawaii reversed this decision. COFA residents were instead to be enrolled in a plan that restricted individual health expenditures called Basic Health Hawaii. This plan, implemented in July 2010, severely restricted access to care, limiting hospital days, outpatient visits, and prescription drugs, and cut patients off from chemotherapy and dialysis. The government's decision to target their healthcare as a cost-saving measure was apparent to COFA residents, and they felt that this policy gave the general population ‘permission to lash out on [them]’.23 In addition to losing access to care, harms accrued due to the experience of racism in healthcare and daily life, negative media coverage, and racist rhetoric from government representatives.23–25

The loss of Med-QUEST coverage was challenged by a lawsuit brought on behalf of COFA migrants.26 An injunction in December 2010 stayed this decision,27 reinstating coverage until 2014, when a judicial panel decided in favour of the state.6 28 COFA residents lost coverage in March 2015, by which time the Affordable Care Act had passed. A 60-day special enrolment period (SEP) was then offered for these individuals to enrol in coverage via the ACA marketplace.21

Impact on healthcare use and health outcomes after 2015

If insurance via the marketplace was a perfect substitute for Medicaid, no change in healthcare use in this population would occur. A recent analysis assessed hospitalisations and emergency department (ED) visits between January 2014 and December 2015.10 Among adult Micronesians (age 18–64), Medicaid-funded hospitalisations and ED visits declined by 31% and 19%, respectively. There was an increase in visits funded via private insurance that did not compensate for this decline. Importantly, there was a marked increase in uninsured ED visits.

Additionally, in a separate analysis of mortality among Micronesian, Japanese and white residents of Hawaii from 2012 to 2018, Micronesians experienced a dramatic relative increase in mortality beginning in 2016.11 By 2018, the relative change in mortality was 43% higher for Micronesians than for white residents. While it is difficult to infer causality from observational data, the quasiexperimental nature of these studies using difference-in-difference methods and incorporating two comparison populations (Japanese and white residents of Hawaii) suggests that the policy change for COFA residents in 2015 both decreased healthcare use and increased mortality. We will now explore potential mechanisms that explain these findings and contextualise them within the existing literature.

Mechanism 1: complex communication challenges

To move thousands of people off a state-funded plan to private insurance without a catastrophic loss of health coverage, the state had to communicate the nature of the policy change, who it affected, and the steps required by individuals to enrol via the marketplace. Compounding this challenge was the high proportion of COFA households (52.3%) reporting challenges with accessing services due to LEP.29 Other US contexts have demonstrated that those with LEP are much less likely to be insured than other populations, both because of related socioeconomic barriers and the direct impact of difficulty understanding printed materials and communication with insurance providers.5 30

In this context, efforts were made to assist individuals with signing up for marketplace plans, including community-based outreach workers called Kōkua, meaning ‘help’ in the Hawaiian language.31 Further, an autoenrolment strategy was established, so that individuals who had not chosen one of the two market-dominant health plans, Kaiser Permanente or Hawaii Medical Services Association (HMSA), were divided between the two plans. Unfortunately, several months after this process, the Hawaii state marketplace was closed after problems with its rollout, and therefore individuals needed to enrol again via the Federal marketplace.32

That communication failures contributed to the decrease in healthcare utilisation is empirically demonstrable. The policy change affected adult COFA migrants who were not aged, blind or disabled (ABD). Children, pregnant women and ABD individuals remained eligible for Med-QUEST, and so healthcare use and outcomes should have been unchanged in these groups. However, inpatient admissions declined for infants and children, while ED visits increased, suggesting decreased utilisation of ambulatory care.10 This may be indicative of a reverse woodworking effect, whereby communications about Medicaid expiration to one group inadvertently discouraged healthcare use in another group whose eligibility remained unaffected.

Understanding the diversity of health literacy is critical in communications around enrolment. A qualitative study of Marshallese migrants revealed that some had a nuanced understanding of the ACA and the steps required to enrol, while others remained uncertain of their eligibility and reported receiving conflicting information from officials.16 To improve access to necessary information and prevent discrimination against those with LEP in accordance with Section 1557 of the ACA, a 2016 rule mandated that no-cost language services be provided to those seeking and using health insurance. In 2020, the Republican administration reversed this interpretation, removing the requirement for individual language assistance and the obligation to notify individuals of the availability of this assistance.33 Reinstating language access is an urgent priority in order to reduce the proportion of uninsured among populations with LEP.

Mechanism 2: administrative burden

Applying for insurance takes time and effort, with significant demands for documentation and follow-up communication. The heavier these burdens, the fewer people will apply. This has been demonstrated in the American context with respect to applications for Medicaid.34 35 In addition to the learning cost where individuals must explore and understand the options available to them as previously discussed, Moynihan, Herd and Harvey describe two other administrative barriers to acquiring health insurance.36 First, the psychological cost is paid by enduring stigma that may be encountered during the application process and the stress that the process may impart. In 2015, the psychological costs to COFA migrants in Hawaii were large. Migrants were being asked to reapply for private insurance after the state government had just defunded their healthcare. In one study, Marshallese migrants expressed frustration and anger that after decades of paying taxes and contributing to the economy, they were ineligible for Medicaid.16 Many gave up trying to apply for health insurance entirely.23 Second, the compliance cost demands that individuals prove eligibility for the programme via proof of identity and residence, income level and other necessary criteria. Despite the fact that COFA migrants are free to live in the USA without documentation as per the Compact, enrolling in the exchanges required government-issued identification and an I-94 status document; the latter could cost hundreds of dollars to replace if no digital or paper copy was available.31 Furthermore, even after providing all necessary documentation and following up with administrators, it could take months before eligibility was determined.16 37

Numerous strategies to overcome these burdens for other vulnerable populations have been studied. While success has been mixed, common themes include the need for deeper community engagement, the availability of trained assisters with knowledge of how to address population-specific barriers (as the Kōkua outreach workers were intended), and a need to minimise bureaucratic requirements.38–41

Some administrative burdens are unavoidable to ensure that an individual is indeed eligible and that there are no better alternative insurance options. However, adverse selection, which could occur if individuals only seek coverage during illness or prior to anticipated health expenditures, might be exacerbated by higher burdens. If less healthy individuals are more tolerant of administrative hurdles, this would result in higher average health expenditures among those who persist through enrolment.42 Streamlining the application process might therefore provide benefit to both the insurer and the insured. Moreover, a safety net programme whose administrative barriers excludes eligible people from healthcare has failed those individuals, making the minimisation of such barriers a moral choice.

Mechanism 3: out of pocket expenditures

Under Med-QUEST, COFA residents faced no direct patient-borne costs of care. After a move to the marketplace, individuals could anticipate the costs of premiums, deductibles and co-payments associated with purchasing insurance and accessing care. The cost of premiums was high compared with income; the monthly cost of the standard ‘Second Lowest Cost Silver Plan’ for an individual could be well over US$300,43 against an average annual income of US$17 400 (see table 1).

COFA residents were ineligible for federal premium subsidies. The state government committed to assisting with the cost of premiums for those individuals who chose a Silver-tier plan, earned less than 100% of the FPL, and who were able to verify income for the previous year. Individuals meeting these criteria were flagged by insurers, and the cost of premiums was billed to the state government.31 Failing to meet any of these criteria would be sufficient to render an individual ineligible, and so uptake of the premium assistance programme was less than expected.31

Even if an individual received premium assistance, the out-of-pocket costs could impact realised access to healthcare. In the COFA population, individuals were arbitrarily split between Kaiser and HMSA, with the former waiving these charges and the latter applying them.10 Although in this context, it did not appear as if these user charges directly decreased healthcare utilisation, this phenomenon is well established in the literature.2 44–46

Cost-sharing is intended to decrease costs borne by the insurer and improve the efficiency of healthcare. However, by introducing financial barriers to accessing care, it may paradoxically worsen efficiency by decreasing the use of primary care.47 Accessing primary health services may not be cost-saving, but can be highly cost-effective.48 Reducing cost sharing might increase the use of primary and secondary preventive healthcare, which has been shown to improve health outcomes, although often at higher cost. This is therefore an important policy lever to consider when insuring vulnerable populations.

Mechanism 4: limited enrolment window

Open enrolment via the marketplace takes place on a limited annual basis. The initial open enrolment period was 6 months.49 Thereafter, individuals had a designated 3-month window each year to apply for coverage, until this was reduced federally to 6 weeks in 2017.50 The rationale for limited windows is to prevent adverse selection. However, this comes at the cost of imposing a temporal barrier to coverage for those who miss the annual window to apply. SEPs are made available to individuals with a change in status (eg, a loss of workplace insurance). COFA residents in Hawaii were offered one such 60-day SEP after losing Med-QUEST coverage,51 but it is unclear how many of them were enrolled during this period.

In contrast, Med-QUEST has no open enrolment period. Hence, prior to 2015, if a COFA resident was to fall seriously ill without being previously enrolled in coverage, the resident could be enrolled in coverage at the point of contact with the hospital. After 2015, if they were unenrolled at the time of illness, they faced catastrophic health expenditures.

While the consensus among health policy-makers is that open enrolment windows do limit adverse selection in private insurance markets, there is some evidence to the contrary. For example, in Massachusetts, waivers to open enrolment are generous; low-income individuals with income less than 300% of the federal poverty level can enrol at any time during the year.52 Despite this opportunity for adverse selection, the state has among the lowest-cost marketplace premiums in the nation.53 This might be explained by healthy procrastinators enrolling late and decreasing average risk,54 or an effective individual mandate which motivates all individuals to enrol to avoid paying fines. Despite this evidence, open enrolment remains the norm.

This highlights an important point. Open enrolment periods are likely to remain a fixture of private insurance markets because of an entrenched belief that they ensure the viability of private insurance plans. However, work has suggested that this also poses as a serious barrier to care for the most vulnerable. Consequently, relying on public insurance such as Medicaid, which permits enrolment at any time, may be preferable to private marketplaces when covering the poorest in the USA.