HMSA net Hawaii Medical Service Association reported net income of $19.1 million on its health insurance business for 2001, soaring 318 percent from the previous year's $4.6 million.
skyrockets
The insurer had $19.1 million
net income for '01By Lyn Danninger
ldanninger@starbulletin.comIn its annual financial statement filed with the state Insurance Division this week, HMSA said it took an underwriting loss of almost $11.7 million. But that loss was offset nearly three times over with $33.8 million in investment gains.
The numbers filed with the state do not include figures from HMSA's for-profit subsidiaries, and other non-insurance activities. Those figures will be included in a consolidated annual report the company will release today.
While HMSA's investment results were not as impressive as the previous year's performance, when the company realized $71.6 million in investment gains the state's largest health insurer improved its financial picture with an $80 million increase in money collected from premiums, taking in $1.14 billion during 2001.
HMSA officials declined to comment about the figures filed with the Insurance Division but said they will address the company's 2001 performance at their annual membership meeting scheduled for today.
Long-time industry observers say they were not surprised by HMSA's improved performance in 2001.
According to Benefit Plan Consultants President Paul Tom, whose firm reviews and negotiates health plan rates on behalf of its business and union trust fund clients, HMSA's financial performance is likely to improve even more by the middle of next year, thanks in large part to increases in premium rates.
HMSA's results are "reflective of the rate increases that HMSA has been imposing on the community," Tom said. "When we look at the financials for next year ending (in) June, we'll find it's improved even more because the rate increases have been between 15 and 22 percent on average."
Tom said he expects that the state Legislature's passage this week of a bill to regulate insurance rates will help moderate premium increases in the future, especially since HMSA's investment income will be included in future rate calculations.
"Clearly rate regulation should improve the rating mechanism that has been used by HMSA, to benefit the employers and employees with lower premium increases, especially since investment income must now be included as part of the rate-making process," he said.
State Insurance Commissioner Wayne Metcalf said HMSA's financial report contained no surprises for his department.
"HMSA's market share has continued to grow as they increased premiums," he said.
Despite several years of underwriting losses offset by investment gains, the company has come under intense criticism in recent years for the size of its financial reserves and also successive rate increases.
HMSA blamed $49 million in 2000 operating losses for the necessity of raising rates last year, arguing it has little control over the continually rising costs of health care.
Metcalf said HMSA's 2001 reserves at first glance appear to be very robust. But since his department only received the filing late Tuesday afternoon, some information contained in it will require further scrutiny.
HMSA is the state's biggest health insurance provider, with almost 90 percent of the private fee-for-service market. HMSA accounts for about 67 percent of Hawaii's entire health insurance market, which includes government programs such as Medicare and Medicaid, and the company's main business competitor, health maintenance organization Kaiser Permanente.