Kaiser raises rates 3.75%

The HMO will offer isle employers a $15 office-visit fee option to lower premiums

Kaiser Permanente Hawaii, declaring its first rate increase since state oversight expired at the end of June, plans to boost premiums an average of 3.75 percent for all employer groups beginning Jan. 1.

The state's largest health maintenance organization attributed the increase to the cost of maintaining its hospital and 18 clinics; the introduction of new services; and the continued implementation of KP HealthConnect, its new medical records system. The rate increase excludes prescription drug and vision coverage.

Kaiser, which has 225,000 members statewide, also said it will introduce in January a new $15 office-visit fee that will be offered as an additional choice for employers. Members choosing the $15 office-visit fee will pay lower monthly premiums. Currently, office-visit fees range from $10 to $14, depending on the plan.

Kaiser's boost in premiums is slightly above the 3 percent that the nonprofit implemented in January of this year but historically below its increases in recent years. In 2005 and 2004, Kaiser raised rates 11 percent and 11.7 percent, respectively. Until its 3 percent increase went into effect this year, the last time Kaiser had sought such a minimal increase was in 2000 when it also raised rates 3 percent.

"We looked at our operational costs, our revenues and primarily what it will take to care for our members and maintain our clinics and hospital," Kaiser spokeswoman Lynn Kenton said. "That includes making investments in our care programs and services in order to serve our current and future members."

Hawaii Medical Service Association, the state's largest insurer, operates on a fiscal-year basis. Its most recent increase, 3.8 percent, took effect on July 1. In recent years, HMSA has announced its rate increases for the bulk of its membership in February.

Kaiser, which during the past three years was required to have its rate increases approved by the state Insurance Division, didn't have to do so this time, because the three-year-old state regulation providing for such approval was not extended by lawmakers in the just-concluded legislative session.

Supporters of the regulation, which included state Insurance Commissioner J.P. Schmidt, have said continued oversight is necessary so that insurers don't charge their members more than is necessary. Schmidt said during the three years that rate regulation was in effect that his office saved Hawaii citizens more than $18 million directly and millions more indirectly by reducing rate requests that did not have proper justification.

Schmidt said yesterday there wasn't much he could say about Kaiser's rate increase.

"Because we no longer have rate regulation, they have not had to file any information with me to justify the rate, so I have nothing to base an opinion on," he said. "Some of the health insurers after rate regulation died stated that they would still make their filings with me, and I told them that we always appreciate more information, but since I don't have authority, I can't really comment on the rates anymore."

Kaiser and HMSA have said rate regulation isn't needed because premium increases are based on the respective insurers' cost structures.

Kenton said Kaiser didn't factor in the lack of rate regulation in determining its 3.75 percent increase.

"Rate regulation has never been a determination in what our rate increases have been historically, and this year is just the same," she said. "We will always continue to try to pass on whatever cost savings we can to our members and have them impacted as little as possible."