Posted on: Friday, June 6, 2003
HMSA to raise rates for small businesses
By Deborah Adamson
Advertiser Staff Writer
Hawai'i's largest insurer will likely increase rates by as much as 9.87 percent in two plans affecting small businesses to keep pace with rising medical costs, company officials said yesterday.
Hawai'i Medical Services Association didn't get the 11.5 percent it asked for from the state Insurance Division on its Preferred Provider Plan for businesses with under 100 workers. But the state did tell HMSA to refile for a rate hike that does not exceed 9.87 percent.
The state also largely approved HMSA's second proposal to boost rates by 7.8 percent for small businesses covered by Health Plan Hawaii Plus, a health maintenance organization plan, said Cliff Cisco, an HMSA senior vice president.
The rate increases would affect 11,000 businesses covering 139,000 workers, he said. HMSA has a total of 670,000 members, which includes employees from small and large companies.
HMSA will file for state approval of the 9.87 percent increase for its preferred provider plan as soon as possible, but Cisco noted the hike wouldn't cover costs.
"We anticipate that we will continue our operating losses," said Cisco, adding that HMSA was "caught off-guard" by the denial of an 11.5 percent hike.
Starting this year, a new law gave the state's Insurance Division power to regulate the rates. Last year, HMSA raised premiums by 5.8 percent, which followed a 9.1 percent rate hike in 2001.
Kaiser Foundation Health Plan already raised rates on its most prevalent plan by 8.9 percent this year for all members. While the state approved the increase in April, Kaiser had been charging higher rates since Jan. 1, said Jan Kagehiro, a spokeswoman.
Filomeno Lumauag, president of the Mabuhay Cafe & Restaurant, is resigned to an increase in premiums as part of the realities of running a business. His Filipino restaurant on River Street employs 11 who are enrolled in HMSA's HMO plan. He said he pays about $170 a month per worker for health insurance.
"There's really nothing we can do about it," he said. "We'll just have to absorb the higher costs."
Lumauag, who runs the eatery with his wife, Carmelita, said he's not planning to lay off anyone or raise prices as a result.
Sen. Sam Slom, R-8th (Kahala, Hawai'i Kai), who runs Small Business Hawaii, said small firms have always taken the brunt of the increase in healthcare premiums. That's on top of higher workers compensation expenses and unemployment taxes.
He would like a repeal of the 1974 Prepaid Health Care Act, which requires employers to pay the bulk of health insurance premiums for full-time workers. While the act benefits employees, in the long run higher healthcare and other costs could drive a small business to the ground and lead to to lost jobs, Slom said.
Small businesses can try to pass along higher healthcare costs by raising prices of their goods and services, but Slom believes it would drive consumers to big businesses that can afford to offer lower prices such as Wal-Mart and Costco.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
