HMSA seeks rate hike for small businesses

By Deborah Adamson
Advertiser Staff Writer

Citing rising healthcare costs, Hawaii Medical Service Association wants state approval to raise health insurance premiums as much as 12.3 percent on average for small businesses.

The changes would affect 138,000 people employed by 11,000 companies.

HMSA wants a 9.6 percent average increase for its Preferred Provider Plan and a 12.3 percent increase for its Health Plan Hawaii, the HMO option.

If approved, the average monthly PPP premium would be $951.36 for a family, $634.24 for a couple and $317.12 for individuals.

"It's very hard for small-business people," said Andy Mohan, who has been operating his custom tailor shop in Honolulu since 1962 and employs six. "(Do) they want small businesses to close their doors? What can we do?"

It would be the insurer's 10th straight year of increases for companies with fewer than 100 employees.

"We have to adjust the rates to keep up with the rising cost of healthcare," said HMSA spokesman Cliff Cisco.

What's more, HMSA says it doesn't see rate increases ending soon.

Premiums will continue to go up as long as healthcare costs keep rising. An aging population that increasingly needs more comprehensive care adds to a costly system.

As health insurance costs rise more and more, companies are feeling the pinch.

When concrete workers went on strike last week, it was because the union refused to accept higher medical co-payments and reduced sick leave for its members.

Nationwide premiums are expected to rise this year by an average of at least 14 percent, according to a survey by Mellon Financial. While down slightly from last year's pace, medical inflation remains in the double digits.

In December, President Bush signed into law a prescription drug benefit program for Medicare patients, which is expected to be a major campaign issue.

HMSA is projecting an 11 percent to 12 percent increase in medical costs this year, down from 14 percent last year.

The insurer didn't ask for a matching rate increase because it's required under the law to use some of its investment earnings to offset higher costs, Cisco said.

Small businesses are likely to ask for employees to bear some of the increased cost.

Christine Camp Friedman, principal of Avalon Development and Consulting in Honolulu, said it's tough for small businesses to keep absorbing rate increases every year.

"Small businesses complain louder because they can't do anything about it. They're at the mercy of the insurer," said the chairwoman-elect of the Chamber of Commerce of Hawaii. "Big companies can write their own plans if they have enough employees."

Some business owners also argue that shifting more of the cost to the employee would make workers more responsible about using healthcare services.

That's why the chamber supported a health plan proposed by HMSA last month that would raise the doctor's visit co-payments to 20 percent from 10 percent but cut premiums by 5.7 percent. The plan also boosts coverage of preventive and mental care.

The proposal is pending a decision from the state Department of Labor.

"It's a step in the right direction," Camp Friedman said.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.

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