HMSA posts
$3.8 million profit
for first quarter

The insurer also has a $293,435
operating loss so far this year

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By Lyn Danninger
ldanninger@starbulletin.com

The state's largest insurer, Hawaii Medical Service Association, improved its financial picture for the first quarter of this year by almost $3.8 million, according to its latest filing with the state Insurance Division.

In its first quarter 2002 report filed Wednesday, HMSA said its net income for the first three months of the year rose to $3.8 million, up from first quarter 2001's profit of $38,010.

According to the filing, HMSA collected $354.6 million in premiums for the 2002 period, up from $263.5 million a year earlier.

Excluding investment income, taxes and other expenses, HMSA posted a $293,435 operating loss. The figure was substantially less than first quarter 2001, when HMSA reported a loss of $14.9 million.

"It looks like HMSA continues to be extremely profitable despite some underwriting losses based on their investment gains," state Insurance Commissioner Wayne Metcalf said.

HMSA executives could not be reached for comment after business hours yesterday.

Hospital reimbursements continued to increase, up 32 percent to $265.2 million compared with just over $200 million a year ago.

Doctor reimbursements also increased, to $13.3 million from $12.7 million in 2001.

Drug plan expenditures also increased. HMSA paid $40.7 million in drug benefits in the first quarter of 2001 compared to this quarter's $53 million paid out.

Membership gains, particularly in HMSA's HMO plan Health Plan Hawaii contributed to the company's growth for the quarter. Total membership grew to more than 631,000 from 616,00 last year.

HMSA recently announced premium increases for its small business customers, saying it will raise rates by an average of 5 percent beginning July.

Last year, HMSA raised its rates for small groups by an average of 9 percent.

HMSA's financial results will now be under increased scrutiny by the state. Under a law passed by the Legislature this month, the state Insurance Division must approve rate increases after Jan. 1, 2003.