State resumes oversight of health insurance rates
State oversight of health insurance rates was permanently restored today, signaling that Hawaii businesses could see significant savings in premiums this year, according to the Insurance Division.
Insurance Commissioner J.P. Schmidt expects insurance carriers to raise rates across the board this year, but expects that rate regulation will "ensure that premium rates are not too high."
Late last year Kaiser Permanente Hawaii, the state's largest health maintenance organization, announced a rate increase effective today of an average of 2 percent -- the smallest in nearly a decade.
Hawaii Medical Service Association, the state's largest health insurer, also indicated it planned rate adjustments for large employers effective this month, though it declined to discuss the amount because the new law was not then in effect.
There is considerable pressure on insurers to increase payments and reimbursements to doctors and hospitals, which will inevitably drive up premiums, Schmidt said.
The law intends to prohibit health insurance rates that are excessive, inadequate or unfairly discriminatory and requires the commissioner to decide on rate submissions in a more timely manner.
Rate regulation expired in June 2006 after lawmakers failed to reinstate the previous law.
"Simply the fact that we had rate regulation caused health insurers to sharpen their pencils and really give close analysis of their rates," Schmidt said. "That in it of itself saved consumers a considerable amount of money."
Schmidt has said that over three years the law saved consumers at least $18 million.
At least one of the smaller players in the market believes that the reinstated law will help it compete more fairly with the larger health plans.
"It brings integrity not only to the rate-setting process, but to market conduct," said Jim Dyer, chairman of Summerlin Life & Health Insurance Co.
The Hawaii Medical Service Association and Kaiser have maintained that government oversight is more harmful to businesses in a self-regulating marketplace.
"With or without government oversight, HMSA uses the same methodology to arrive at fair, equitable rates," said Michael Stollar, HMSA vice president of corporate communications.
Representatives of Kaiser, Hawaii Medical Assurance Association and UHA were unavailable for comment.