Posted on: Wednesday, August 25, 2004
Summerlin rate plans OK'd
By Deborah Adamson
Advertiser Staff Writer
The state yesterday approved rate plans for three health plans from Summerlin Life & Health Insurance Co., ushering in the fifth health insurer in Hawai'i and the only one set up as for-profit business.
"We're open for business," said Jim Dyer, chairman of I/MX Companies in Tempe, Ariz., the parent of Summerlin.
Summerlin kicks off its entry into Hawai'i with three group plans — one has set co-payments, another is a preferred-provider organization plan and the third calls for the patient to pay 20 percent of healthcare costs up to a yearly maximum.
State Insurance Commissioner J.P. Schmidt said Summerlin's rates are "competitive" with those in the market. But more importantly, the company injects more competition into the industry.
Hawai'i's other healthcare companies, Kaiser Permanente Hawaii, Hawaii Medical Service Association, Hawaii Management Alliance Association, and University Health Alliance, are all non-profit organizations.
"It adds some competition to the health-insurer market, and that's a good thing for all of Hawai'i's citizens with the ever-increasing health insurance premiums that we've been seeing," Schmidt said.
"Competition inevitably will force all of the health insurers to concentrate on providing better-quality service and to provide their product at the best price possible," he said.
That already may be happening.
Today, the Hawai'i Employer-Union Health Benefits Trust Fund — which provides health insurance for 200,000 government workers, retirees and dependents — will decide whether to open its contract for bids. If so, Dyer said Summerlin will compete for the business, whose service would start in July.
Two weeks ago, Summerlin was invited to bid on the contract for Med-Quest, the state's Medicaid program, which covers 150,000 people. That contract also would start in July.
One of Summerlin's strategies is to first concentrate on groups, so that it can build critical mass quickly, Schmidt said. The company plans to offer plans for individuals and children later.
Dyer said premiums will be based on many factors, including demographics of the group. That means younger, healthier populations generally should qualify for lower rates. However, for groups with 500 or more workers, claims history is key.
The Summerlin Easy Hawaii All 20% Plan calls for the patient to pay 20 percent of healthcare costs up to $2,500 a year per person, or $7,500 per household. There is no deductible.
The $15 Office Plan sets co-payments at $10 and $15, depending on the service rendered. Some outpatient services have a $100 deductible. There is a maximum of $2,000 a year per person for out-of-pocket expenses, or $6,000 per household.
The PPO, or preferred-provider organization, plan calls for the patient to pay 20 percent of costs if using physicians and services within the company's network. For out-of-network services, the split is 25 percent paid by the patient, 75 percent paid by the insurer. The yearly per-person maximum is $2,500, or $7,500 for each household.
HMSA's CompMed plan, which also calls for the patient to pay 20 percent of costs, charges $295.28 for one person, $590.56 for two and $885.84 for a family. The rates are for businesses with fewer than 100 employees.
Thus far, Summerlin hasn't offered plans that could be directly compared with Hawai'i's most popular plans. Under the Prepaid Health Care Act, the plan that gets the most members sets the base standard for subsequent plans of the same type.
For PPO plans covering only the employee but no dependents, otherwise known as a "7A" plan, HMSA's Preferred Provider Plan is the prevalent plan. For HMO plans designated as "7A," Kaiser's plan is the most popular.
If Summerlin offered nearly identical products to the prevalent plans, it won't have as much price flexibility because the benefits are the same, Dyer said. Moreover, Summerlin has to pay a 4 percent premium tax levied by the state on for-profit health insurers.
Other competitors have gone up against the prevalent plan and failed.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.M
Under the All 20% Plan, a business with 10 employees whose health is slightly above average would be assessed a monthly premium of $258.69 for one person, $507.94 for two and $751.40 for a family.
"It adds some competition to the health-insurer market and that's a good thing ... with the ever-increasing health insurance premiums we've been seeing."
— J.P. Schmidt | Hawai'i insurance commissioner
