State calls for HONOLULU >> The Cayetano administration wants to combat the soaring cost of health insurance through state regulation of rates, but representatives of Hawaii's two largest health care plans -- HMSA and Kaiser Permanente -- say that's a bad idea.
regulation of
health plan rates
Health insurers argue there is no
need for 'inappropriate intrusion'By Bruce Dunford
Associated PressState Insurance Commissioner Wayne Metcalf told a state Senate Commerce and Consumer Protection Committee hearing Tuesday that rate oversight can help minimize unnecessary costs and cost increases.
"This is particularly important in an era of rising health care costs," he said.
"The health insurance market in Hawaii is monopolistic," Metcalf said. "The dominate health plans have few incentives to reduce rates or correct inefficiencies."
He said state oversight of rates "acts as a control against predatory pricing, thus making the competitive environment for health insurers more robust."
Metcalf said "Hawaii's health care plan landscape is littered with the corpses of failed health care plans."
State regulation would expose to consumers whether there is a correlation between the actual cost of health care and the insurance rates being charged to cover those costs, he said.
He said oversight must include the whole system, noting that higher cost for new drugs might be offset by reduced medical care for the affliction the new drugs address.
Mike Gold, executive vice president and chief operating officer of HMSA, said rate regulation will do nothing to lower health care costs.
"HMSA has lost more than $100 million in the last three years, clear evidence that rates are not excessive," he said. Gold did not mention that the association's net investment income over the same period was $177 million.
"Other states with rate regulation do not experience lower premium rates than Hawaii," Gold said. "By forcing plans to charge artificially low rates that do not cover the cost of care, plans will be driven out of business. Rate regulation is an inappropriate intrusion into private businesses."
Chris Pablo, a representative of Kaiser Permanente, said rising health care costs are in large part due to the expectation of consumers to get the best health care has to offer.
"What's broken here?" he said. "Perhaps the best way to ascertain whether rate regulation should be adopted is to first define the problem or the problems in our health care environment and the policy options available to address these problems."
University of Hawaii law Professor Richard Miller, a consultant for the Hawaii Coalition for Health, said the current system provides no place for consumers "to go to complain."
"Our health plans are inadequately regulated to protect the rights of the consumers who rely on them for health care or the businesses, large and small, that purchase health plans in conformity to Hawaii's trailblazing prepaid health care act," he said.
Rich Meiers of the Healthcare Association of Hawaii, which represents hospitals and other medical facilities, said the state "should be wary of any attempt to regulate the price of any product, and we should carefully consider whether or not it will be beneficial in the long term."
Health care consultant Paul Tom, president and senior consultant for Benefit Plan consultants described rate regulation as a "double-edged sword."
But Tom said that given changes in the local health insurance market, lack of competition and the failure of several health plans, he is in favor of some kind of government oversight of plan rates.
"It is clear that rate oversight could have aided in the monitoring of pricing practices in the marketplace," he said.
He also complained about difficulty in obtaining rating information used by the state's largest insurer, HMSA.
Tom also pointed out how difficult it can be for small employer groups to purchase less costly basic medical plans without drug, dental and vision coverage included in the package.
Committee Chairman Ron Menor (D, Waipahu-Crestview-Mililani) said he recognizes possible rate regulation raises complex issues that can't be resolved overnight and need full analysis before moving any legislation.
Star-Bulletin reporter Lyn Danninger contributed to this story.
State Web Site
