Hawaii’s Largest Insurer, HMSA, Plans Rate Hike

Haeaii’s biggest health insurer wants to hike health insurance premiums by more than 12 percent next year, the biggest increase in nearly two decades.

The proposed rate hikes would affect 144,000 members and businesses with fewer than 200 employees starting July 1. The increases must be approved by state insurance Commissioner J. P. Schmidt before they can go into effect.

“In recent years, we have fallen short of that mark as cost trends have outpaced increases in member dues,” said Steve Van Ribbink, HMSA’s chief financial officer.

If the proposal is approved, the rate for 88,750 members in HMSA’s popular Preferred Provider Plan would jump 12.8 percent.

Another 4,400 members in its CompMed plan could see a 12.7 percent hike. Those participating in Health Plan Hawaii, a health maintenance organization, or HMO, would face a 14.3 percent increase. The HMO has 51,250 members.

HMSA said it suffered nearly $23 million in losses last year because its rates weren’t high enough to cover costs.

Hospital inpatient costs went up 13.5 percent and emergency room costs increased 20.2 percent even though the volume of services was largely unchanged, the insurer said.

Schmidt said the proposed hike is significant, so the state will examine it very closely.

“An increase of this sort places a heavy burden on business … and particularly with the economy and its unsettled state, this is an additional burden that makes it difficult for businesses here in Hawaii,” Schmidt said.

Health care costs have long been a rising business and personal expense.

This puts a strain particularly on small businesses mandated by Hawaii law to provide medical insurance for full-time employees, said Tim Lyons, executive director of Hawaii Business League, which represents about 1,500 small businesses.

“Just because health insurance goes up doesn’t mean you can suddenly increase your prices,” he said. “It will be challenging for all of them to weather.”

HMSA said 94.4 percent of member dues last year went to pay hospitals, physicians and other medical providers. Inadequate reimbursements from government providers has shifted the burden on the health plan to pay more for services, resulting in higher rates for consumers, the insurer said.