HMSA raises rates by 5% for small businesses
By Frank Cho
Advertiser Staff Writer
The state's biggest medical insurer is raising rates by an average of 5 percent this year for thousands of small businesses.
The Hawaii Medical Service Association said yesterday that rising drug costs are behind the rate increase, which will affect about 10,000 businesses, primarily those with fewer than 100 employees.
"Medical costs are continuing to outpace health plan rates," said Cliff Cisco, senior vice president for HMSA.
Cisco cited factors such as Hawai'i's aging population, increasing prescription drug costs and the use of new, expensive medical technology as the primary drivers of rising medical care costs.
The rate adjustment, which begins July 1, will affect the roughly 20 percent of HMSA's 630,000 covered members who work for small businesses.
The other 80 percent of HMSA's members also may see similar increases this year.
This is the fifth consecutive year of rate increases by HMSA to combat rising drug and claims costs. But yesterday's rate increase announced by HMSA is about half the size of last year's 9 percent average increase.
The rate decision, which comes barely a week after the insurer reported a $19 million operating loss in its health insurance business, will not be affected by a measure passed last week by the Legislature to begin regulating healthcare premium rates.
Gov. Ben Cayetano is expected to sign the bill, but it would not take effect until next year.
HMSA reported revenues of $1.22 billion in 2001, but the company said payouts to doctors and hospitals rose 1.6 percent, or $1.24 million, from a year earlier. That contributed to an operating loss of more than $19 million. After gains from its investments are factored in, HMSA had a net profit of $6.5 million, up 38 percent from $4.7 million the previous year.
Businesses in Hawai'i are required to provide health insurance for most workers, but coverage for dependents, plus drug, vision, and dental coverage is not part of that requirement.
