Kaiser gets OK for rate increases


POSTED: Thursday, December 31, 2009

It took longer than either side expected, but Kaiser Permanente Hawaii has received approval by the state Insurance Division to boost group health insurance rates by an average of 10.7 percent.

The increase goes into effect tomorrow for about 150,000 members.

State Insurance Commissioner J.P. Schmidt said yesterday that Kaiser was granted the entire increase it requested because the amount was justified “;based on the facts and actuarial analysis.”;

“;We know that health care costs are rising faster than the general rate of inflation and our prior analysis of rate increases has been pretty much on point because the insurance companies have either been lately suffering small losses or, in some cases in prior years, they did have some small profits,”; he said. “;There is this continuing rapid increase in the costs of drugs and medical equipment and other health care expenses that the health insurers do have to cope with.”;

Schmidt said the Insurance Division also approved a Kaiser rate increase of 9.5 percent for groups the health care provider had given quotes to prior to Oct. 1 and 12.3 percent for groups it had given quotes to after Oct. 1.

Earlier this month, the Insurance Division approved a 12.63 percent rate increase for Kaiser's 14,000 individual members, also effective tomorrow.

Kaiser, which lost $1.8 million through the first three quarters of this year, was caught off-guard by yesterday's late-day, rate-increase approval only because the Insurance Division recently had requested additional information to make a decision, and the company had thought the decision might not be announced for several more weeks.

Schmidt acknowledged that the increase just beat the implementation date.

“;We did a full analysis of it, with analysis by our nationally recognized actuary and, obviously, we really put this through the ringer with numerous questions,”; Schmidt said. “;We're coming to a decision now later than we normally would have wanted, but once we gathered all the information, it was determined that it was not inadequate, not excessive and not unduly discriminatory, and the rate was justified based on the facts and actuarial analysis.”;

In addition, Schmidt said Hawaii Medical Service Association received approval to raise rates an average of 11.7 percent for medical and prescription drugs for 17 businesses with more than 200 employees. Those increases will go into effect over the next six months as their policy years expire.

The Insurance Division previously had approved a 9.9 percent HMSA rate increase for other large businesses whose policies expire Jan. 1.

Also, University Health Alliance received approval to raise rates 11.5 percent for its 3,000 plan and 13 percent for its 600 plan. UHA has about 30,000 members.