Taking aim
at health costsLocal insurance giants HMSA
and Kaiser present regulators
with plans designed to address
growing employer concerns
about rising premiums
In an effort to stem the growing number of complaints from businesses about rising health plan premium costs, Hawaii's two largest health insurers are seeking approval of new, less costly alternatives to their most popular plans.
The plans are not intended to replace their existing offerings, but are responses to marketplace demands, said both Kaiser Permanente and Hawaii Medical Service Association.
The plans were presented yesterday at a meeting of the Prepaid Health Care Advisory Council.
The group, which advises the state Department of Labor, is made up primarily of representatives from business and health care. It reviews all health plans offered in Hawaii to see if they meet benefits standards set by the two predominant plans in Hawaii, Kaiser's health maintenance organization plan and HMSA's preferred provider plan. They then make recommendations on plan approval or disapproval to the state's director of Labor and Industrial Relations, presently Nelson Befitel, who has the final word.
Plans that meet the benefit standards set by the two largest plans received a so-called "A" status. Plans that do not meet an "A" level of benefits may be given a "B" status.
The ratings distinction effects plan cost. Even though "B" plans with lower levels of benefits are generally less costly, they also require a larger employer contribution toward the monthly premium, making them less attractive to cost-conscious small businesses. While most Hawaii employers cover the majority of their employee's monthly health plan premiums, not all are prepared to pick up at least 50 percent of dependent coverage as well, which is required with "B" plans.
The plan presented to the council by Kaiser, which called for a $10 office visit charge and a 10 percent patient share for most other services, including in-hospital care, did not meet the higher standard and was awarded a "B" designation.
Kaiser officials said they were prepared for the plan to be awarded a "B" rather than an "A" status.
"Given the strict requirements of the (Prepaid Health Care) act, employers in Hawaii have limited flexibility in what they can do to bring down monthly premium costs as well as passing on a greater share of the monthly premium cost to their employees," said Chris Pablo, Kaiser's director of corporate communications.
The organization also recognizes the plan may not be suitable for all employers.
"Unfortunately, the added employer cost above the employee contribution may not make it that attractive to everyone," he said.
But offering the plan now and obtaining at least a "B" approval is an important first step, Pablo said. It gets people familiar with the concept of a less benefit-rich plan, but less costly plan.
The council did not approve HMSA's plan submission, instead asking company representatives to reconsider catastrophic coverage benefits, among other things.
The HMSA plan called for more employee cost sharing in the form of a $300 deductible and most benefits paid at 80 percent, rather than the 90 percent paid under its preferred provider plan. Employers would also make a one-time $200 contribution into a so-called "personal care account" which the employee could use toward meeting the plan deductible.
How much flexibility there is in the rules and how closely a plan must conform to the existing predominant models in order to be given an "A" status are questions that came up frequently at the council meeting. It's also something the Department of Labor has been studying. The Lingle administration has said one of its goals is to provide more health insurance alternatives to employers as a way to bring down costs.
Since Jan. 1, 1975, Hawaii's Prepaid Health Care Act of 1974 has required nearly all employers to provide health insurance to employees who work 20 hours or more a week. Employers may cover the full cost of the insurance premium or share in the cost with their employees based on a fixed formula that requires the employer to contribute 50 percent or more of the premium cost for single coverage. Employees may contribute the balance providing it does not exceed 1.5 percent of their wage. As health insurance premiums have risen over time, employers have increasingly complained.
The small business representative on the council, Beverly Harbin, challenged the idea that the intent of the law was to end up with only two prevailing plans against which all others would be measured.
"The legislative intent seems to indicate more flexibility," she said
Harbin favors greater cost sharing of health plan costs.
"This to me starts making that little step towards consumer responsibility," Harbin said of the two offerings.
