HMSA to boost rates by 18.2%


POSTED: Friday, December 12, 2008

Hawaii Medical Service Association is forging ahead with double-digit rate hikes for 148,000 members renewing health plans next month in the face of an economic recession.





Health insurance rate increases:

        » 18.2% affecting 18,000 HMSA individual plan members


» 11.4% affecting 150 large businesses and 130,000 HMSA members


» 4.9 % affecting 6,000 companies and 167,232 Kaiser Permanente Hawaii members


Hawaii's largest health insurer received state approval this week to boost rates on Jan. 1 by an average 18.2 percent for 18,000 individual plan members and by 11.4 percent for about 150 large businesses with 130,000 members.

The Hawaii Insurance Division also approved a 4.9 percent jump for Kaiser Permanente Hawaii's rates - the highest since 2005 - which will affect 6,000 companies and 167,232 members.

“;I'm shocked that the rates are that high,”; Tim Lyons, executive director of Hawaii Business League, said of HMSA's rate increases.

The primary driver for the hike in rates for the high-risk individual plan group is increased utilization in addition to higher fees HMSA is paying hospitals and doctors, according to HMSA spokesman Cliff Cisco.

“;It's the nature of the population; unlike group coverage where an employer provides coverage to all their employees - all the well and sick people mixed together - sometimes people don't seek individual coverage unless they have a health-care problem,”; he said.

For the year, HMSA projects revenue of $41.7 million from its individual plan, though payments to providers is estimated at $42.2 million before administrative expenses, said Steve Van Ribbink, HMSA's chief financial officer.

HMSA had about 705,000 total members at the end of November.

“;We've got a fairly substantial loss ratio on this business and that's why we had to raise the rates,”; he said, adding that HMSA has recorded losses for the individual plan group for at least a decade.

Still, the rate hikes will be hard for both individuals and businesses to swallow in the current environment.

“;No matter whether you're a small or large business, all businesses are having a hard time making ends meet,”; said Lyons, whose organization represents about 1,250 small businesses. “;When you have increasing costs of that magnitude, you have a hard time balancing that when there's not a corresponding increase in income.”;