Oversight for health premiums debated
By Bruce Dunford
Associated Press
State Insurance Commissioner Wayne Metcalf squared off yesterday with lobbyists for Hawai'i's two largest health care plans over the administration's proposal to regulate health insurance rates.
"What rate oversight will do, among other things, is make sure the money collected in terms of premium dollars and money earned on the back end is being applied for the purposes for which it is collected or earned and that the rates are fair to the people of the state," he told two Senate committees.
Metcalf said the state's largest health care insurer, the nonprofit Hawaii Medical Service Association, created 10 subsidiaries, including a number that are for profit, with money that otherwise was not applied to the payment of benefits.
"That's fine," he said. "But we know that they lent their subsidiaries money — $10 million so far this year, close to $30 million last year. That is money that doesn't go to the payment and the reimbursement of providers."
The state established the state Public Utilities Commission to regulate rates charged by the electric and telephone companies that have a monopoly in providing vital services, Metcalf said.
"We kind of have that situation here with medical. We have Kaiser (Permanente) sort of like the telephone company and HMSA like the electrical company, but there's no PUC," he said. "What this bill basically does is to provide the consumer, both the employer and the employees, an opportunity to have a voice in the bills they are required by law to pay."
Opposing the bill before the Consumer Protection Committee and Health Committee, which deferred action on the bill until tomorrow, was Jennifer Diesman, representing HMSA.
"Rate regulation will do nothing to address the real problem facing the health care industry — the rising cost of care," she said.
Diesman also argued that Hawai'i's health rates are among the lowest in the nation and that rate regulation in other states has resulted in increased rates.
Chris Pablo of Kaiser Permanente, the second-largest health insurance program, said "the matter of rate regulation is a solution in search of a problem."
The rising costs of health care are driven by the patients' growing expectation "that for whatever ails us, they can fix it ... to be treated by the latest and most advanced technique, technology or therapy ... to get the name brand drug that we've seen in a recent TV or magazine ad ... , " Pablo said.
Metcalf didn't buy the argument that rising insurance rates necessarily are tied to rising medical costs.
"Premium disclosure would ensure first that premiums are in line with health care costs," he said. "Thereafter, an intelligent inquiry can be undertaken to determine the other cost drivers that may need to be addressed to further control escalating health care costs."
In the House, the committees on Health and Consumer Protection have approved a similar measure that goes to the Finance Committee for further consideration.
Rep. Kenneth Hiraki, D-25th (Kaka'ako, downtown Honolulu), chairman of the Consumer Protection Committee, said regulating health insurance rates is one of several moves to address "what is becoming a Hawaiiopoly" in which certain industries are dominated by a few companies.
The panel approved a bill yesterday to regulate gasoline prices and will soon take up a resolution opposing the merger of Hawaiian and Aloha airlines, he said. "It's the same issue — restricted competition leading to high market prices, and now we're seeing the same thing with health plans."
