Posted on: Friday, May 21, 2004

Health insurer choice to widen in Hawai'i

By Deborah Adamson
Advertiser Staff Writer

A Nevada health insurer took a step closer to entering the Hawai'i market yesterday, winning preliminary state approval for three health plans it hopes to launch before the end of the year.

Summerlin Life & Health Insurance Co., a for-profit company based in Las Vegas, got the nod from the Prepaid Health Care Advisory Council subject to moderate changes on benefits. The council advises the state labor director, who ultimately approves or rejects a plan.

"We're very pleased that the council agreed with the majority of the benefits included in our proposed plan," said Jim Dyer, chairman and chief executive of I/MX Companies in Tempe, Ariz., the parent of Summerlin.

Summerlin's entry into the medical insurance market is eagerly awaited by business owners and others who have complained that with two dominant healthcare organizations here — Hawaii Medical Service Association and Kaiser Foundation Health Plan — there wasn't enough competition that could lead to lower prices and improved service.

I/MX covers a million people in Illinois, Iowa and Nevada. That compares to 676,000 covered by HMSA, the largest health insurer here.

Summerlin is planning to offer three health plan options: One has a set co-payment for doctor's visits and other services; the second makes the member pay 20 percent of the healthcare bill; and the third has a two-tier pricing system for in- and out-of-network services.

Summerlin has received its license to operate as a health and life insurer in Hawai'i, Dyer said. The last step is to file for rate approval with the state Insurance Division.

Paul Tom, chairman of the Prepaid Health Care Advisory Council, said once Summerlin makes the benefit changes required, its plans would be recommended for approval to Labor Director Nelson Befitel. The labor director usually concurs with the advisory group.

"What was impressive for me is that they had a doctor, a licensed physician, that actually helped them design the plan," Tom said.

Marketing executives and other non-medical managers usually present a healthcare plan to the council, he said, but Summerlin's plans were presented by Dr. Richard O'Connor, the corporate medical director of I/MX.

HMSA announced this week that it has cut back its request for a rate increase for business customers with fewer than 100 workers. HMSA will ask the state to approve 7.8 percent and 7.4 percent increases, respectively, for its Preferred Provider Plan and Health Plan Hawaii Plus instead of 9.6 percent and 11.6 percent. HMSA said lower-than-expected healthcare costs and healthy first-quarter profits prompted the revised requests.

On July 1, HMSA will launch CompMED, a plan that will be cheaper for employers because it shifts more of the up-front costs to patients.

Summerlin's prospects for Hawai'i had a setback when the state Legislature decided the company must pay a 4.265 percent premium tax. A bill that would have exempted for-profit insurers from the premium tax was killed last month. Hawai'i's other health insurers are all nonprofits and thus don't pay the tax.

Dyer said that even with the tax, Summerlin will be able to operate profitably in Hawai'i.

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