Posted on: Wednesday, May 18, 2005
HMSA to raise rates for small businesses
| • | Insurer cites higher healthcare costs, lower investment income |
By Deborah Adamson
Advertiser Staff Writer
Hawai'i's largest health insurer has received state approval to increase rates by up to 4.9 percent on average for small businesses, effective July 1.
The Hawaii Medical Service Association, or HMSA, said the increase would be the nonprofit's lowest since 1998 for businesses with fewer than 100 workers on its Preferred Provider Plan.
Small businesses on the CompMed plan, which was introduced last year, also would see an average 4.9 percent hike while those on Health Plan Hawaii Plus would see an average 4.5 percent increase.
The new rates would affect 11,000 small businesses employing 141,000 people. HMSA covers nearly 700,000 members.
Monthly dues for a family on the Preferred Provider Plan would increase to $981.30 while those on Health Plan Hawaii Plus would see the rate go up to $893.88.
For CompMed, the rate would be $929.70. Rates include medical, drug, dental and vision benefits.
HMSA has said it was able to ask for a smaller rate hike this year in part due to lower-than-expected increases in medical costs.
Last year, HMSA rates rose by an average of 7.8 percent for small businesses on its Preferred Provider Plan with medical, drug, dental and vision benefits.
HMSA said it would voluntarily use 100 percent of its annual investment income from reserves to offset dues for the next 12 months. By state law, health insurance plans are required to use at least 80 percent.
HMSA also said it would use its reserves to pay for a $40 million investment to upgrade the nonprofit's claims-processing system and information-management capabilities.
Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.
Insurer cites higher healthcare costs, lower investment income
Higher healthcare and administrative costs as well as lower investment income contributed to a 57-percent decline in first-quarter profits from a year ago for the Hawaii Medical Service Association, the state's largest health insurer.
Revenue: $419.1 million, up 5.2 percent from a year ago
Net income: $7.54 million, down 57 percent from 2004 Investment income: $5.76 million, down 21 percent from a year ago Benefit expenses: $379.3 million, up 7.6 percent from 2004 Administrative expenses: $35.2 million, up 10 percent from a year ago Reserves: $538.7 million, down 0.4 percent from 2004 • Healthcare costs rose by 7.6 percent in the quarter compared to the same period a year ago. • Net realized investment income fell 21 percent due to unfavorable market conditions. • HMSA paid physicians, hospitals and other providers more than $126 million a month in the first quarter i or $9 million per month more than the same period last year.
"Healthcare costs in Hawai'i are continuing to rise, and unfortunately, the rate of growth has begun to increase in recent months. In particular, hospital costs increased significantly in 2004 and are continuing to rise steeply in 2005."
— Steve Van Ribbink | Chief Financial Officer, HMSA
What's next
Starting July 1, HMSA will raise rates by an average of 4.9 percent for small businesses that subscribe to the Preferred Provider Plan or CompMed. For Health Plan Hawaii Plus, the increase would be 4.5 percent.
In early 2006, HMSA expects to offer Health Savings Accounts, in which subscribers of high-deductible health insurance plans can set aside pre-tax money to pay for health and long-term-care costs. Unused money is carried over to the following year.
First quarter
Reasons
What they are saying
