New health plan
to focus on small firmsSummerlin expects to start
marketing its products by mid-year
Summerlin Life & Health Insurance Co., the Nevada-based health insurer that plans to enter the Hawaii market, will likely be ready to offer several different insurance products within the next few months, its top executive says.
Jim Dyer, chief executive officer and president of Summerlin's parent company, Tempe-Az.-based IMX Inc., said he anticipates being ready to begin selling Summerlin health plans in Hawaii by May or June in time for July 1, when many of the state's small business renew their health plans.
"It's our intent to hit the streets with our products prior to mid-year," he said.
Initially, the company intends to focus on small business customers -- those with 50 employees or fewer. It will also be open to setting up so-called association plans for those self employed and small businesses who belong to trade groups and business associations. It's been this group that has had increasing difficulty in the last few years obtaining insurance as the state's existing insurers gradually phased out association-type offerings.
Dyer said he has been working closely with the state Insurance Division to complete the necessary filings required to begin doing business in Hawaii. After that, the next step will be a review of plan designs by the state Department of Labor's Prepaid Healthcare Advisory Council and finally a return to the Insurance Division for review and approval of rates as required by the state's rate oversight law.
Dyer said HMO, PPO and point-of-service products would be likely among the initial plan offerings.
Summerlin's sister company, HMA Inc., has been doing business in Hawaii since July 2001. It handles third-party administration of health care claims for a number of local employer-union trust fund groups and several private companies. There also is a related pharmacy benefit management company, called RXX, and Health Management Network, or HMN, it's provider network.
The various pieces needed to begin offering a full insurance product in Hawaii are now in place, according to Dyer.
Dyer said Hawaii will be the second location for Summerlin, which was recently set up in Nevada. He also plans to expand the company to Arizona, New Mexico, Iowa and Illinois -- locations where IMX already has a presence with some of its other insurance and insurance-related products. The company's 2002 state filing in Nevada shows about 25,000 members enrolled in commercial plans. It also has experience with government related health care programs. Much of its business and membership comes from administering Medicaid programs in several states. In 2002, its Medicaid plans averaged about 78,000 members.
Dyer said the company also would likely bid for Hawaii's Quest contract the next time it comes up for bid.
But as a for-profit company, one hurdle Summerlin will need to overcome before doing business in Hawaii is the state's 4 percent premium tax. The tax is not applicable to Hawaii's nonprofit health insurers, such as Hawaii Medical Service Association, Kaiser Permanente, University Health Alliance and HMAA.
Without an exemption from that tax, it would be difficult to compete with the other nonprofit plans, Dyer said.
"Clearly, the tax is a major issue, but it's only a small part of a much bigger picture. Our intent is to work with the Legislature and the governor to seek a repeal of the tax. We need a level playing to field to compete," he said.
"We believe that common sense will dictate that it will be repealed," he said.
Insurance Commissioner J.P. Schmidt said he plans to request that an existing bill from last legislative session, which provides exemption from the premium tax for health insurers, be reconsidered this session.
Schmidt said he sees the company's willingness to enter the market as a good sign.
"I think it's very good news. If we have good competition then we'll tend to have lower prices and better quality of service and we'll tend to avoid other problems in the market you find any time you only have a few companies willing to do business," he said.
Meanwhile, Hawaii's other health insurers will watch to see how Summerlin fares.
"Perhaps if the state chooses to change the laws to allow for-profits to operate in the same way that nonprofits operate, that may be an incentive for other Hawaii insurers to change their status. Perhaps we'd see more Hawaii-based health insurers forming," said Arnold Baptiste Jr., president of HMAA.
Still, no matter how many health insurers do business in Hawaii, the real issue is the cost of care, Baptiste said.
"The real issue for the rising cost of insurance has little to do with competition but a lot to do with hospital, physician, drug and other costs from rising utilization. Any insurer will have to deal with those issues," he said.