Kaiser loses $2.8M Hawaii's second-largest health insurer, Kaiser Permanente, lost more than $2.8 million on its health plan operations last year.
Hawaii’s second-largest health insurer
blames higher medical costsBy Lyn Danninger
ldanninger@starbulletin.comIn its year-end filing with the state Insurance Division, Kaiser reported it collected $407.7 million in premiums from members, a 5 percent increase from a year earlier. In addition, for 2002 Kaiser collected $171.7 million for patients who are covered by the federal Medicare and Medicaid programs.
A year earlier, the nonprofit collected nearly $389 million in premiums from its members, not counting Medicare and Medicaid. For 2001, Kaiser reported a net income of $13 million.
There are several reasons for last year's losses, Kaiser spokeswoman Jan Kagehiro said.
Hospital and medical expenses for the organization went up considerably during 2002, primarily due to an increase in outside referrals.
Kaiser spent almost $610 million for hospital and medical expenses for the year -- a jump of almost $88 million from the previous year.
"There was a higher demand for hospital beds than we anticipated and when our beds are full we have to send patients to other hospitals, which increases our costs," she said.
The organization announced plans last year to launch a $200 million construction and renovation plan to expand facilities to meet increased member demand. However, it will take five years to complete all the projects.
There was also a shortfall in Kaiser's pension plan for retirees.
"Because of difficulties with the stock market, like many other companies, our investments didn't earn enough," she said.
In addition, administrative costs increased, Kagehiro said.
Those increased costs were mostly related to aging facilities and equipment and the cost of complying with regulations related to upcoming federal patient privacy legislation, Kagehiro said.
Kaiser has already filed a request with the Insurance Division to raise health plan rates by 9 percent for its most popular medical plan. The company will likely receive a decision by the end of March, Kagehiro said.
Kaiser's main competitor, Hawaii Medical Service Association, also filed earlier this month to increase rates for its large employer groups by an average of 5.8 percent. HMSA is expected to file its 2002 year-end statement with the Insurance Division this week.