The September 11th attack
Governor proposes oversight over health insurance rates

By Lynda Arakawa
Advertiser Capitol Bureau

The state insurance commissioner would be given more control over Hawai'i's health insurance rates under a proposal being pitched by Gov. Ben Cayetano.

But some legislative leaders already are arguing that the issue is too complex to tackle during a five-day emergency special session.

The insurance proposal is among 20 draft bills Cayetano sent to legislators, who are preparing for an emergency special session to stimulate the state economy in the wake of the Sept. 11 attacks.

Under the draft proposal, the state insurance commissioner would be able to order health insurers to change their rates if it is determined that they are "excessive, inadequate or unfairly discriminatory." It also would require health plans to disclose increases in health care costs when seeking to increase rates.

"We've told the governor that we believe that there is an urgent need for this process, particularly to ensure a coordinated, effective response during trying economic times," said state insurance commissioner Wayne Metcalf. He said such a law would benefit virtually every Hawai'i resident who has health insurance.

"We believe that Hawai'i citizens need to be ensured of as seamless a system of health care coverage as possible," he said. "We've identified a need for a coordinated and supervised approach to dealing with health care in times of economic dislocation."

Metcalf said Hawai'i was one of only two states that do not have such regulations on the health insurance industry. He declined to give further details of the proposal. Senate Commerce, Consumer Protection and Housing Committee Chairman Ron Menor, D-18th (Waipi'o Gentry, Wahiawa), said he will seriously consider holding a public hearing on the issue before the Legislature begins the special session.

House Consumer Protection and Commerce Committee Chairman Ken Hiraki, D-25th (Downtown, Ala Moana), said he will hold a hearing either during a special session tentatively scheduled for Oct. 22, or during next year's regular session. Hiraki said he is "surprised at how little oversight the state has provided over rates."

But House Speaker Calvin Say and Senate President Robert Bunda said yesterday such a complex issue needs more research and public discussion than the special session can provide.

"It's not a bad idea, it's just the timing is not right," said Say, D-18th (Palolo, St. Louis, Kaimuki). "What is the crisis?"

"There are some impacts to businesses and coverage and benefits (so) perhaps maybe we should look at this in a regular session rather than just carte blanche here it is in a special session," said Bunda, D-22nd (Wahiawa, Waialua, Sunset Beach). "It's something that I think we really don't know the effects of. I think, truly, we need to spend more time."

Cliff Cisco, spokesman for Hawai'i Medical Service Association, the state's largest health insurer, called the proposal unnecessary and said it unfairly targets HMSA. The proposed bill also includes a provision requiring health plans to reduce rates or return excessive reserves to enrollees.

HMSA has come under increased scrutiny recently over their reserves. The Advertiser in August reported that HMSA, the state's largest health insurer, had accumulated more than $502 million at the end of last year while raising rates for most if its members in recent years.

Cisco disputed that the $502 million figure was applicable, and said the value of the reserves has dropped since Sept. 11.

"We think we can document and show that HMSA has one of the lowest rates in the country," Cisco said. "Our annual membership survey shows that we have a high level of satisfaction. ... We're not sure what the problem is."

"It (the governor's bill) seems to be opportunistic in that it's being introduced under the cover of the aftermath of Sept. 11."

Chris Pablo, spokesman for Kaiser Permanente Hawai'i, also questioned the timing of the proposal. "It is a bill that should be considered during the regular session of the Legislature when there is sufficient time to address this most complex problem of rising health care costs," he said.

Advertiser Capitol Bureau Chief Kevin Dayton contributed to this report. Reach Lynda Arakawa at 525-8070 or larakawa@honoluluadvertiser.com