Health-insurance control eyed

By Bruce Dunford
Associated Press

The Cayetano administration wants to combat the soaring cost of health insurance through state regulation of rates, but representatives of Hawai'i's two largest healthcare plans — HMSA and Kaiser Permanente — say that's a bad idea.

State insurance commissioner Wayne Metcalf told a state Senate Commerce and Consumer Protection Committee hearing yesterday that rate oversight can help minimize unnecessary costs and cost increases.

"This is particularly important in an era of rising healthcare costs," he said.

"The health insurance market in Hawai'i is monopolistic," Metcalf said. "The dominant health plans have few incentives to reduce rates or correct inefficiencies."

He said state oversight of rates "acts as a control against predatory pricing, thus making the competitive environment for health insurers more robust."

But Mike Gold, executive vice president and chief operating officer of HMSA, said rate regulation would do nothing to lower healthcare costs.

"HMSA has lost more than $100 million in the last three years, clear evidence that rates are not excessive," he said. Gold did not mention that the association's net investment income over the same period was $177 million.

"Other states with rate regulation do not experience lower premium rates than Hawai'i," Gold said. "By forcing plans to charge artificially low rates that do not cover the cost of care, plans will be driven out of business. Rate regulation is an inappropriate intrusion into private businesses."

Chris Pablo, a representative of Kaiser Permanente, said rising healthcare costs are in large part due to the expectation of consumers to get the best healthcare possible.

"What's broken here?" he said. "Perhaps the best way to ascertain whether rate regulation should be adopted is to first define the problem or the problems in our healthcare environment and the policy options available to address these problems."

University of Hawai'i law professor Richard Miller, a consultant for the Hawaii Coalition for Health, said the current system provides no place for consumers "to go to complain."

"Our health plans are inadequately regulated to protect the rights of the consumers who rely on them for healthcare or the businesses, large and small, that purchase health plans in conformity to Hawai'i's trailblazing prepaid healthcare act," he said.

Rich Meiers of the Healthcare Association of Hawaii, which represents hospitals and other medical facilities, said the state "should be wary of any attempt to regulate the price of any product, and we should carefully consider whether or not it will be beneficial in the long term."

Committee chairman Ron Menor, D-Waipahu-Crestview-Mililani, said he recognizes that possible rate regulation raises complex issues that can't be resolved overnight and need full analysis before any legislation is moved.