HMSA offers
price breaks to all
affected by layoffs

The state's largest health insurer
plans to temporarily cut rates
and offer rebates

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By Lyn Danninger
ldanninger@starbulletin

The state's largest insurer, Hawaii Medical Service Association, said yesterday it will temporarily cut health insurance rates in half for members who lost their insurance in the economic aftermath of the Sept. 11 terrorist attacks.

Employers who contract with HMSA to cover their employees will also see a rebate of 5 percent of their annual dues. HMSA estimates the employer rebate will save Hawaii companies about $35 million in annual dues.

HMSA said it will dip into its reserve funds to implement the $50 million dollar program.

The organization will take a two-pronged approach that will benefit members who have been laid off from their jobs and HMSA's employer groups.

HMSA members laid off between Sept. 11 and Jan. 1, 2002, may be eligible for subsidized coverage, said HMSA Vice President Cliff Cisco. Employer groups will receive a one-time rebate, he said. Checks will be mailed late this month.

For employees who have lost company-paid health coverage and cannot afford to extend it beyond their job termination date, there are two options, Cisco said. For companies with 20 or more employees, those affected may enroll in their employer's COBRA extended health benefit plan, a federal program that allows employees to continue coverage at their own expense. HMSA will offer a 50 percent subsidy for the first three months of COBRA dues after coverage is lost. For those employed by companies with fewer than 20 employees, HMSA will set up a special group plan also featuring the 50 percent subsidy for three months.

In both cases, children already covered under their parents' group health plans will be covered at no cost for the first three months, Cisco said.

How many people will be able to take advantage of the subsidy program is still unclear because state Department of Labor figures on employee health coverage losses will not begin to become available until after employee health plans begin to lapse. But record numbers of residents -- about 10,000 -- have applied for unemployment benefits since the attacks.

Cisco said HMSA will be sending letters next week to employers explaining how the program will work.

The special extension-of-coverage plan created by HMSA for its employers with fewer than 20 employees must still be approved by the state's Insurance Division.

Insurance Commissioner Wayne Metcalf said he was pleased to hear about HMSA's efforts.

"The Insurance Division looks forward to working with HMSA so this program can be implemented as quickly as possible," he said.

Metcalf is also hopeful that such a program could continue if it is feasible.

"HMSA has not yet shared with us the financial basis for their calculations, but I'm hopeful if needed, this program could expand further as appropriate," he said.

In recent months, HMSA has come under fire for the high level of financial reserves it maintains, about twice as much as required by the state Insurance Division. HMSA officials argue that such reserve levels are what makes it possible to offer the subsidy and rebate program when emergencies occur.

In the past six years, HMSA's board has voted twice to offer refunds on health plan dues.

"This just speaks to the positive values of having a strong community-based organization that can make a decision like this," said HMSA's Cisco.

Hawaii's largest health maintenance organization, Kaiser Permanente, said it already has begun working with employer groups adversely affected by the state's economic downturn.

"We've been working with groups on a case-by-case basis to help strategize how best to make it through these tough times," said Kaiser spokeswoman Jan Kagehiro.

For individuals who may have difficulty obtaining health plan coverage, Kagehiro said the organization is looking at ways to help.

"As far as an individual dues subsidy is concerned, Kaiser has begun looking both locally and at the national level to possibly develop a program for those people who don't qualify for any established health plan," she said.