HMSA can raise
rates 4.9 percent

The state approves the hike,
saying the insurer justified
its calculations

Hawaii Medical Service Association, the largest local health insurer, has received approval from the state Insurance Division for the 4.9 percent rate increase it requested for its small business groups.

The increase, which matches HMSA's smallest hike in seven years, will go into effect on July 1. It covers prescription drug, dental and vision coverage for the HMSA Preferred Provider Plan, which is the most popular plan among the insurer's members.

State Insurance Commissioner J.P. Schmidt said one of the reasons the request was granted was HMSA said it would subsidize insurance dues with 100 percent of its annual investment income for the next 12 months. Health plans are required by law to use only 80 percent of their annual investment income from reserves to augment future premiums.

"That helped reduce the premium that they were requesting, and they provided good support and justification based on the continuing increase in the cost of health care services that we are seeing," Schmidt said. "We have seen a slight softening of that increase. It hasn't been going up quite as much as it has the last couple of years, but it still is increasing."

Under the new premiums, single people under the preferred-provider plan will have monthly dues of $327.10, with couples paying $654.20 and families $981.30. Health Plan Hawaii Plus members will pay $297.96 for a single person, $595.92 for two and $893.88 for a family. CompMED members will pay $309.90 as a single, $619.80 for two and $929.70 for a family.

HMSA's small-employer groups have fewer than 100 employees. Businesses with 100 or more employees renew their insurance at different times of the year and saw their premiums rise an average of 5 percent beginning in January.

"We're pleased with (Schmidt's) timely approval in that it's earlier than previous rate filings," HMSA Senior Vice President Cliff Cisco said. "The approval system is getting smoother."

Schmidt said the expedited approval had to do with the information that HMSA included in its proposal.

"Their rate filing was the cleanest filing that we have received from them," Schmidt said.