Hawaii Medical Service Association, reeling from soaring health care costs, has now lost more money in nine months than in any full year in its history.

The 71-year-old insurer reported today that it lost a staggering $23 million in the third quarter — its second-largest quarterly loss ever — to bring its total loss for 2009 to $53.7 million.

And Steve Van Ribbink, chief financial officer of the state's largest health insurer, sees things getting worse in the current quarter.

“;We do see it getting worse, unfortunately,”; he said. “;What we're seeing is high utilizations. We think people are concerned about the economy and are seeking more health care services than they otherwise would, such as people who are losing their jobs or are afraid of losing their jobs. We're also seeing a lot of increases in office visits and emergency room visits by people who have symptoms of the flu or who are concerned they may have contracted H1N1.”;

HMSA, which said it has received state approval to raise rates an average of 9.9 percent in January for its larger businesses, has now posted net losses for four straight quarters since earning $5.1 million in the third quarter of 2008. Its previous largest quarterly loss was $31 million in the fourth quarter of 2002.

The insurer's net underwriting loss — which excludes investment income and taxes — was even worse last quarter at $32 million. That brought HMSA's underwriting loss for 2009 to $74.1 million and marked the 14th straight quarter that the insurer has had an operating loss. The only larger underwriting loss was in 2008 when HMSA lost $86.6 million for the entire year.

Van Ribbink said high use of services last quarter resulted in 98.3 percent of members' dues being used to pay for physicians, hospitals, pharmacies and other health care providers. Historically, he said, 93 percent of member dues have gone toward health care costs and about 7 percent toward operations.

The quarterly loss would have been even higher if the insurer had not generated $7.9 million in investment income from the company's reserve, which stood at $381.5 million as of Sept. 30. In the past, HMSA has come under fire in the state Legislature for its perceived high reserve levels, but Van Ribbink said HMSA's recent financial results confirm what the company has been preaching.

“;You need reserves because these things can happen,”; he said. “;It's good we had these reserves because the reserves have helped us come through the times where we've had very high health care utilizations and costs associated with it. I think 98 percent of dues going toward health care costs is an all-time high.”;

Benefit expenses paid to health care providers rose 8.7 percent to $403.9 million last quarter, or $134.6 million a month, from $371.7 million a year ago. Revenue, or dues collected from members, increased 5.5 percent to $411.1 million from $389.8 million.

“;We hate passing on these kinds of rate increases (such as the recently approved 9.9 percent increase), but we've got to keep our rates consistent with what we see in health care cost trends,”; Van Ribbink said. “;Otherwise, bad things can happen — you could have larger losses.

“;Health care costs are going to have to turn around, and we can't continue to go out to the community and ask for these kind of rate increases. So we are working with the provider community to improve the quality and costs associated with health care.”;