HMSA's big-firm rates to rise

Insurance coverage will cost 4.4% more for companies with at least 100 workers

The Hawaii Medical Service Association, in its first rate increase since state oversight of health insurance ended in June, said today it will boost premiums an average of 4.4 percent for businesses of 100 or more employees that renew contracts in January.

The increase will affect 125 employer groups and about 110,000 members, and follows a 3.8 percent increase for HMSA's small-employer groups that went into effect on July 1. The small-employer rate increase was still under the auspices of state regulation.

HMSA, the state's largest insurer with 704,612 members as of June 30, raised premiums for its large groups an average of 3.4 percent last year for the groups that renewed in January 2006.

The remainder of HMSA's large groups renew their contracts throughout the year.

"Health-care costs in Hawaii are increasing, but fortunately at a pace slower than locations on the mainland," HMSA Chief Financial Officer Steve Van Ribbink said. "Some cost-inflation factors have moderated over the past year or two, like prescription medications. We have also seen decreases in the number of hospital admissions."

However, Van Ribbink said that during the second quarter of this year, HMSA paid physicians, hospitals, pharmacies and other health-care providers nearly $139 million per month, an increase of nearly $9 million per month from the same quarter in 2005.

"Payments to Hawaii's health-care providers are increasing," Van Ribbink said. "In turn, these increases are factored into HMSA health-plan rates."

Until June, Hawaii health insurers were required to have their rate increases approved by the state Insurance Division. But that 3-year-old law expired at the end of the last legislative session after it was not extended by state lawmakers.

In August, Kaiser Permanente Hawaii became the first of Hawaii's two largest insurers to increase premiums without state oversight when it announced an average 3.75 percent increase that will take effect in January for its 225,000 members.

At Hawaiian Electric Co., one of the employers that will be affected by HMSA's latest increase, spokeswoman Lynne Unemori said the company's 2,100 employees would not have to pay more immediately because there is not a direct pass-through to employees every time a health-care provider increases premiums.

"We recognize, like all businesses, that HMSA's own costs are increasing," she said. "So while cost increases are never easy, they are understandable. The employees' share of health-plan premiums (which includes built-in annual escalations) is set based on the last contract negotiated with our union (International Brotherhood of Electrical Workers 1260)."