HMSA, Kaiser profits increase
By Deborah Adamson
Advertiser Staff Writer
Hawai'i's two largest health insurers reported double-digit increases in profits for the third quarter, helped in part by rate increases that boosted revenue.
The Hawaii Medical Service Association recorded a net income of $10.4 million in the quarter, up 14 percent from earnings of $9.1 million in the like period a year ago.
Revenue came to $410.7 million, up 6.2 percent from $386.9 million in the prior year.
Benefit expenses came to $376 million in the quarter, or 91.6 percent of revenue. Administrative expenses were $30.5 million, or 7.4 percent of revenue.
As such, the net operating gain — premiums collected minus medical and administrative costs — came to $4.2 million, nearly triple the operating gain of $1.5 million recorded a year ago.
At quarter's end, HMSA's reserves stood at $516 million, up 5.7 percent from the end of 2003.
In July, HMSA raised rates by an average of 7.8 percent for small businesses in its Preferred Provider Plan and by 7.4 percent for Health Plan Hawaii Plus. It also increased rates by 5.2 percent to 10.9 percent for firms with more than 100 workers.
Separately, Kaiser Foundation Health Plan reported a net income of $4.3 million, up 87 percent from $2.3 million recorded in the same quarter a year ago.
Revenue came to $197.3 million in the quarter ended Sept. 30, up 10 percent from $178.6 million last year.
Operating expenses were $194.3 million, up from $176.3 million in the prior year.
Operating income was $3 million compared with $2.3 million — an increase of 30 percent.
Kaiser also said its Waipi'o clinic on O'ahu will open on Nov. 29 and the Maui Lani clinic on Maui on Dec. 6.
However, the two clinics will not be offering the full range of services and hours of operation as planned. Kaiser will make a decision after the state acts on its request to hike rates by 11 percent in 2005. This year, Kaiser increased its rates by 11.7 percent on average. It had initially asked for a 14.7 percent hike.
"We'll make final decisions when we have an operational budget based on our new 2005 rates," said Janice Head, Kaiser regional president, in a statement.
Insurance Commissioner J.P. Schmidt said the state has saved residents $12.5 million in 2003 by approving smaller rate increase for Kaiser and HMSA than they had requested.
The state bases its decision on information provided by insurers as they seek to justify any rate increases, Schmidt said.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
