HMSA asks state for 3.8% rate boost

This is the smallest increase requested by the state's largest insurer since 1997

Hawaii Medical Service Association, acknowledging that claims and health-care costs are rising at a slower-than-expected pace, said today it has asked the state Insurance Division for a 3.8 percent rate increase for its small-employer groups.

The request, which would take effect July 1 if approved by state Commissioner J.P. Schmidt, is the smallest increase sought by the state's largest insurer since 1997 when the average rate increase was 2.8 percent. It covers drug, dental and vision and will affect nearly 142,000 members at about 11,000 small businesses with 100 or fewer employees.

HMSA, which at the end of December had more than 700,000 members, raised rates 4.9 percent in fiscal 2005 for its small-business, or community-rated, groups.

Businesses with 100 or more employees, or merit-rated groups, renew their insurance at different times of the year, with most of the increases occurring in January. Their rate increase will average 3.4 percent this year.

Kaiser Permanente Hawaii, the state's second-largest insurer and largest health maintenance organization, implemented a 3 percent rate increase on Jan. 1 of this year.

Schmidt said the rate-increase request is lower than HMSA has sought in recent years but that the agency will still review the filing very closely because of the impact it has on so many people.

"We are still watching health-care costs very closely," Schmidt said. "Recent studies show that care for folks with chronic illness -- who need care over extended periods of time or even for the rest of that person's life -- are one of the most serious drivers of health costs."

HMSA members participating in the Preferred Provider Plan and CompMED, the two most popular plans, will see an average increase of 3.8 percent. Members choosing HMSA's Health Plan Hawaii, an HMO plan with drug and vision coverage, will see an average increase of 8.5 percent. There are 56,000 members enrolled in Health Plan Hawaii.

Under the higher proposed premiums, single people with a preferred-provider plan will have monthly dues of $339.62, with couples paying $679.24 and families $1,018.86. Health Plan Hawaii Plus members will pay $321.42 for a single person, $642.84 for a couple and $964.26 for a family. CompMED members will pay $321.34 for a single, $642.68 for two and $964.02 for a family.

Steve Van Ribbink, HMSA's executive vice president and chief financial officer, said that in determining a rate increase HMSA takes into account claims from small-business groups that can vary significantly from year to year.

"So to ensure rate stability over time, HMSA uses a form of community rating for small-business groups that combines projections of future costs and current claims experience," he said. "Overall, this helps to protect their health-plan rates from radical fluctuations over time."