Board refuses rise in public workers' insurance rates


POSTED: Wednesday, October 07, 2009

The state and county workers dodged an extra 13 percent medical insurance increase when a state board pulled back its plan to raise rates.

The Hawaii Employer-Union Health Benefits Trust Fund voted unanimously yesterday to hold rates at the level set this summer.

The decision goes against the recommendations of the fund's consultant firm, AON Consulting, which said last week that rates should go up an additional 13 percent.

“;Basically, they didn't approve that,”; said Jim Williams, fund administrator. “;They understand the potential financial implications for that. There may be losses for the six months from January to June.”;

Medical insurance rates for state and county workers were increased almost 24 percent in July.

The decision to ignore the consultant comes after management representatives on the board refused to approve another increase.

Hawaii County wrote to the board yesterday saying the new suggested rate increase was “;something none of us expected.”;

Noting that the county budget had been set in July, “;there are no excess funds in our budget to cover yet another rate increase,”; said Nancy Crawford, Big Island finance director.

Gov. Linda Lingle said last week that she also was not convinced by the fund's actuary's report. Lingle noted that the consultant said much of the new increase was because AON said state and county workers were using more medical services because of their own uncertain job prospects.

“;It seems to be a very broad kind of statement with no evidence from what I saw,”; Lingle told reporters. “;To raise fees based on what is happening in a very narrow period of time seems to me to be unreasonable.”;

Other trustees, however, feared the consultant's warnings that the fund would lose $2.7 million a month if the extra rate increase was not approved.

Trustee John Radcliffe argued that if the rates were not raised now, the fund will not be able to raise rates until July, and the fund could have lost $16 million by then.