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The Honolulu Advertiser
Posted on: Wednesday, May 17, 2006

HMSA in good health with solid first-quarter earnings

Advertiser Staff

The Hawaii Medical Service Association, the state's largest health insurer, reported first-quarter earnings increased 12 percent from the same period a year earlier as revenue from premiums and investments rose faster than what it paid out in benefit expenses.

Net income: $8.4 million vs. $7.5 million.

Premium revenue: $443.8 million vs. $419.1 million

Investment income: $7.57 million vs. $5.76 million

Benefit costs: $396.2 million vs. $379.4 million

Administrative expenses: $42.3 million vs. $35.2 million

Reserves: $572.7 million vs. $556 million


  • Administrative expenses jumped 20 percent as HMSA increased funding of a technology upgrade.

  • Premium revenue, when adjusted on a per-member, per-month basis, increased 3.9 percent.

  • The number of members rose to 704,592 from 691,543 a year earlier.

  • Operating income was $7.58 million versus $5.79 million during the 2005 first quarter.


    "We may have bottomed out with the benefit expense trend in the first quarter. ... I think we'll start to see it rise above where it's been. I hope I'm wrong."

    Steve Van Ribbink
    HMSA executive vice president and chief financial officer


    HMSA will be monitoring expenses under the Medicare drug program to see if they match expectations.

    The insurer is ramping up computer hardware and software spending under a $40 million upgrade program.

    HMSA, mindful that benefit expenses may start rising faster, will continue to lower costs through disease management and other programs.

    Correction: The Hawaii Medical Service Association had 704,592 members at the end of March, up from 691,543 a year earlier. A previous version of this story contained incorrect information.