HMSA nets
$9.2 millionThe Hawaii insurer pockets
$7.65 million of its gains
through its investments
The Hawaii Medical Service Association, showing an improved financial picture in both underwriting and investments, posted a $9.2 million gain in the third quarter.
In its latest filing with the state Insurance Division, HMSA reported a net underwriting gain of $1.5 million and investment income of $7.65 million.
By comparison, HMSA reported underwriting losses of just more than $13 million in the third quarter of 2002. It ended 2002 with losses that now total $40.5 million, adding a further $5.6 million to its $35 million loss originally reported after a further deferred asset tax adjustment was included, Chief Financial Officer Steve Van Ribbink said yesterday.
But this year, Van Ribbink said he is optimistic about year-end results. For the first nine months, the company has so far sustained a net operating loss of $10 million. But when midyear rate increases for small businesses have fully taken effect and investment income for the year is included, the operating picture should brighten by year-end, he said.
"Year-to-date we'll still have an operating loss, but it will improve a bit to a break even or even a little better in the fourth quarter," he said. "We'll still have an operating loss but a net gain."
While the cost of benefits continues to rise, Van Ribbink said the rate of growth has slowed down.
Revenues collected from health plan dues during the third quarter amounted to $386.9 million while the company paid out $358.9 million in health care benefits. Administrative expenses for the third quarter totaled $26.5 million, or 6.8 percent of dues. Dues income exceeded benefits and administrative expenses by $1.5 million.
HMSA's reserves stood at $440 million at the end of the third quarter.
With the improved financial forecast, Van Ribbink said Jan. 1 rate increases for 140 of HMSA's largest business customers should average around 9.7 percent.
Earlier this year, HMSA had asked the state Insurance Division to approve a rate increase of 11.5 percent beginning in July for its small-business customers. The division approved a rate increase of 9.9 percent.
HMSA's individual members who also renew Jan. 1 likely will see average rate decreases of 4 percent, he said.
HMSA competitor Kaiser Permanente asked the division in September for an average 14.5 percent rate increase. If approved, the rate increase would take effect Jan. 1, 2004.
HMSA membership at the end of October stood at 676,632. Of that number, 466,040 were enrolled in HMSA's most popular preferred provider plan, 132,048 were enrolled in one of its HMO plans and 78,544 were enrolled in its Quest program.
