Kaiser may increase insurance rates next year
By Deborah Adamson
Advertiser Staff Writer
Despite a 17-fold increase in its second quarter net income, Kaiser Permanente Hawaii said yesterday it wants to raise rates next year to counter rising medical costs and build more clinics.
"With the magnitude of the building we need to do, we will very quickly consume that profit," said Janice Head, president of Kaiser in Hawai'i.
Kaiser hasn't said how much it wants to raise rates but will do so when it files for approval from the state later in the year, Head said.
In April, Kaiser received state approval to increase rates by an average of 9 percent. The hike had been in effect since Jan. 1, 2003. Kaiser is Hawai'i's second largest health insurer, serving 235,000 people.
Earlier this week, Hawai'i Medical Service Association said it would seek approval to increase rates that would affect about half of its 670,000 members. It's the second time this year that HMSA has asked the state for a rate increase. HMSA is Hawai'i's largest health insurer but does not provide direct medical care.
Kaiser offers health insurance, runs clinics and hospitals, and employs doctors, nurses and other medical personnel through three units: Kaiser Foundation Health Plan, Kaiser Foundation Hospitals and Hawai'i Permanente Medical Group.
Head said the nonprofit needs to expand as the number of members increase. In the past eight years, the number of members has climbed by more than 20 percent, or 50,000 people.
Kaiser needed to expand in the late 1990s, but budget concerns put capital projects on hold, Head said.
Head said in some instances doctors have had to share offices, and that sometimes only one exam room has been available. Kaiser didn't have enough hospital beds last year and had to use outside hospitals, Head said.
Moreover, Kaiser expects to spend $12 million each in 2004 and 2005 for a new, automated medical record system.
Wages, drug costs and other medical expenses also have been rising. Head said Kaiser tries to manage the frequency of services being used within its facilities but it can't control rising medical costs outside its system, he said.
As for construction projects, Kaiser said the building of its Waipi'o clinic on O'ahu remains on schedule and the facility should open late next year.
On Maui, the Maui Lani Clinic in Wailuku is being built and the Lahaina facility soon will be renovated. Earlier in the year, Kaiser expanded its Kihei clinic.
Kaiser said more construction projects are coming.
In the second quarter, Kaiser reported a net income of $1.79 million compared with $103,000 in the same period a year ago. Profits rose as revenue increases outpaced costs.
Revenues came in at $173.9 million compared with $152.2 million in the prior year. Medical costs totaled $168.3 million vs. $149 million.
In 2002, Kaiser had a net loss of $2.8 million — the first yearly loss it has had in recent history.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
