Tuesday, October 9, 2001

State of Hawaii

Health plans already
gearing to oppose
state insurance bill

Insurance Division proposes
new rules for special session

What the bill would require

By Lyn Danninger

Hawaii's health insurers are already circling the wagons to fend off a proposed bill put forward by the state Insurance Division that would regulate the health care premiums they are allowed to charge.

The division now regulates other lines of insurance, such as motor vehicle, worker's compensation, homeowners and other property and casualty types but has no jurisdiction over health insurance rates.

State Insurance Commissioner Wayne Metcalf said he could not comment on the contents of the proposed bill until it is released in its final form from the governor's office. But he said rate regulation in other lines of insurance -- such as auto and worker's compensation -- have produced significant savings for Hawaii consumers in the past.

Metcalf said his division sent the draft to the governor's office in response to a request that all state departments come up with proposals to help offset economic declines in the wake of the Sept. 11 terrorist attacks.

But the draft of the proposed bill, which surfaced at the Legislature and could be heard during the upcoming special legislative session scheduled to begin Oct. 22, is already producing vigorous lobbying efforts by the state's health insurers.

The bill has health insurers concerned for several reasons.

They contend that instead of stabilizing health care premiums, already lower in Hawaii than many other states, the bill would have the opposite effect.

"We're not quite sure what the problem is," HMSA Vice President Cliff Cisco said. "Hawaii already has some of the lowest rates in the country."

Cisco's thoughts were echoed by Kaiser's director of public affairs, Chris Pablo.

"Over the last 10 years, Kaiser has maintained rate stability and our rates compare favorably with rates for health plans on the mainland," he said.

Moreover, Pablo believes the upcoming emergency session should focus on more urgent matters such as the plight of workers who lost their jobs and the travel and tourism industry, already facing a severe decline in business.

Health insurance plan rates are now regulated in all states except Missouri and Hawaii.

The draft notes Hawaii's shrinking health insurance market has led to a situation where consumers and businesses have few choices in health insurance. With the lack of competition, Hawaii's remaining health insurers have little incentive to offer competitive rates, it said.

HMSA's Cisco notes that recent initiatives such as the organization's temporary member subsidies and an employer rebate would not have been possible had the company been burdened with further government rules and not had the flexibility to make the decision.


Draft health insurance bill

The proposed rate regulation would require health plans in Hawaii:

>> To provide the actuarial basis for premiums, justify rates and publicly disclose increases in health care spending and any cost-shifting.

>> Would ensure that premium payments made by employers and enrollees could not be used for expenditures unrelated to the delivery of health care services and claims processing.

>> Notes that rate regulation ensures that rates are adequate enough to promote long-term viability of health plans.

>> Would allow the state Insurance Division to call for rate adjustments when it finds that rates submitted by insurers are excessive, inadequate or unfairly discriminatory.

>> Would allow the state insurance commissioner to order excess money be returned to plan members or rates be lowered if a health plan's net worth exceeds 50 percent of its annual health care and operating expenditures. Health insurers must also submit all plan revisions that would alter coverage to the Insurance Division.

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