Declining membership results in losses for Kaiser, HMSA
Kaiser hope to attract new members with expanded clinic hours and mother baby unit
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The state's two largest health insurers both lost money in the third quarter, after taking in less revenue because of lower membership.
Hawaii Medical Service Association
3RD-QUARTER LOSS: $600,000
YEAR-EARLIER GAIN: $6 million
3RD-QUARTER LOSS: $10.9 million
YEAR-EARLIER LOSS: $7.2 million
, predominantly a preferred-provider organization, posted a net loss of $10.9 million compared with a loss of $7.2 million a year earlier.
Revenue, or the premiums collected from members, decreased 18.1 percent to $370.9 million from $452.6 million in the same quarter of 2006.
Kaiser Permanente Hawaii, the state's largest health-maintenance organization, had a loss of $600,000 versus net income of $3 million a year ago.
Revenue fell 0.8 percent to $213.1 million from $214.9 million during the quarter.
Kaiser also said yesterday it would raise premiums for businesses an average of 2 percent beginning Jan. 1.It is the smallest increase since Kaiser raised premiums in both 1999 and 1998.
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Hawaii Medical Service Association and Kaiser Permanente Hawaii, the state's two largest health insurers, both posted losses in the third quarter as lower membership dragged down revenue.
HMSA's net loss widened to $10.9 million from $7.2 million a year earlier while Kaiser, which said yesterday it would raise premiums for businesses an average of 2 percent beginning Jan. 1, swung to a loss of $600,000 versus net income of $3 million a year ago.
The state's largest insurer, HMSA, saw its revenue and benefit expenses decline in the third quarter due to a decision by the Hawaii Employer-Union Health Benefits Trust Fund to shift to a self-funded arrangement with HMSA. The insurer also saw a reduction in members of QUEST, which is the state's Medicaid plan.
"HMSA will still process its (EUTF) members' claims, but EUTF revenue and benefit expenses are no longer reflected in our books," said Steve Van Ribbink, HMSA executive vice president and chief financial officer.
HMSA, predominantly a preferred-provider organization, had a total membership of 699,806 at the end of the third quarter, down from 706,582 at the conclusion of the second quarter.
Revenue -- premiums collected from members -- decreased 18.1 percent to $370.9 million from $452.6 million a year ago, while HMSA's benefit expenses, the amount that the insurer paid physicians, hospitals, pharmacies, and other health-care providers, dropped 18 percent to $356 million from $434 million.
HMSA's administrative expenses fell 12.9 percent to $38.2 million from $38.7 million.
The insurer's investment income jumped 21.5 percent to $9.6 million from $7.9 million.
Kaiser, which has eliminated 144 positions and restructured its administrative staff since last year, attributed its third-quarter loss to "the general rate of medical inflation combined with an unexpected loss in membership," according to Kaiser Chief Financial Officer Dave Delaney.
The state's largest health-maintenance organization, which has 220,000 members, saw it membership fall by about 800 below what it was forecasting during the third quarter. But membership already has started to rebound, said Jan Kagehiro, director of member and marketing communications.
Revenue fell 0.8 percent to $213.1 million from $214.9 million during the quarter, while operating expenses rose 0.8 percent to $216.4 million from $214.6 million. Investment income remained flat at $2.7 million.
Kagehiro said the second round of layoffs, which affected 90 positions, was completed this week, although some employees were asked to stay through the end of the year. The other 54 positions were cut last year.
"What we're really doing is we're redirecting how we're providing care, and that's largely in response to what our members have been asking for," Kagehiro said. "So while we did have reduction in some areas of the organization, we also had about 100 new positions available. We're truly hoping that some of the people whose previous jobs were eliminated are going to be applying for the new jobs. The new jobs are going to be focused on how we're going to be providing care going forward."
Janet Liang, president of Kaiser's Hawaii Region, said the new tower at the Moanalua Medical Center is scheduled to open next spring, with the new mother-baby floor and expanded emergency department to be the first services open to members and the public.
Liang also said that Kaiser members are "responding very positively" to the medical provider's announcement of expanded clinic hours beginning in 2008.