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The Honolulu Advertiser
Posted on: Saturday, March 13, 2004

Kaiser's 14.5 percent rate increase rejected

By Deborah Adamson
Advertiser Staff Writer

The state has denied Kaiser Foundation Health Plan's request to raise rates by an average of 14.5 percent this year, an increase that's already kicked in for most of its members.

Instead, the state Insurance Division signaled it would be amenable to an increase ranging from 11.5 percent to 11.7 percent, according to Kaiser.

But either increase distresses Carol Fontes, a 56-year-old Waikiki resident.

"I was upset about the 14.5 percent increase," she said. "I don't like the 11 percent either."

Kaiser, the state's second-largest insurer, applied the increase starting Jan. 1 for 190,000 of its 235,000 members.

But the insurer said members will get refunds if a lower rate increase eventually is approved.

The Insurance Commissioner's decision isn't final. Kaiser officials are still reviewing their options and did not commit to the rate increase range recommended by the state.

"I don't think there were any surprises. (But) we were certainly hopeful that the department would agree to the substance of our filing," said Claudia Schmidt, Kaiser's vice president of business development.

"They have a differing point of view about the timing of the benefits of our automated medical record system. We are making a major investment."

In mid-2004, Kaiser plans to launch a new system that automates record keeping at a yearly maintenance cost of $12 million a year. It is a 10-year, $3 billion project for the entire Kaiser group nationwide.

On Monday, Kaiser reported a net income of $10.8 million for 2003 compared with a net loss of $2.8 million in the year before. Operating revenues came to $710.5 million, up 13.5 percent from 2002.

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