Healthcare costs bring down HMSA's net income in 2005
The Hawaii Medical Service Association, the state's largest health insurer, reported 2005 net income tumbled 44 percent from a year earlier as premium revenue grew more slowly than healthcare services costs. HMSA ended the year with 700,500 members.
Revenue: $1.72 billion vs. 2004's $1.60 billion.
Healthcare costs: $1.57 billion vs. 2004's $1.44 billion.
Administrative costs: $141.6 million vs. 2004's $132.5 million.
Investment income: $29.1 million vs. 2004's $26.7 million
Net Income: $25.5 million vs. 2004's $45.5 million
Reserves: $556 million vs. $541 million a year earlier
WHAT THEY ARE SAYING
"It's something we're paying close attention to. ... Our operating gain was only 0.3 percent of every dues dollar."Steve van ribbink
HMSA chief financial officer, talking about rising healthcare services costs. The member benefit costs rose an average of 8.8 percent for the year, with fourth-quarter costs rising 10.6 percent.
HMSA is seeking a 3.8 percent rate hike for about 11,000 small businesses with 142,000 workers. State Insurance Commissioner J.P. Schmidt is reviewing the request.
Health plan reserves are forecast to decline this year in relation to the cost of claims paid for members. Part of the decline will be caused by the new Medicare Part D program, which will add $40 million to the nonprofit insurer's costs.