HMSA rate increase trimmed to 12.1%
BY Greg Wiles
Advertiser Staff Writer
The Hawaii Medical Service Association's biggest rate increase in 20 years for small businesses has been cut slightly after a review by the state Insurance Division.
There will be an average 12.1 percent increase for its popular Preferred Provider Plan including vision, drug and dental. That's instead of the average 12.7 percent it had requested. The Insurance Division also cut rates on other plan increases HMSA sought.
Deputy Insurance Commissioner Gordon Ito said the reductions will save HMSA customers $2 million annually off what had been proposed.
"We questioned some of the trends and they agreed," Ito said. The rates go into effect July 1 for about 11,000 community-rated groups that are primarily small businesses. The groups employ about 103,000 of HMSA's 703,500 members.
HMSA filed for approval of the increase in April, saying it had been buffeted by costs that were rising faster than premium increases and that it still needed the double-digit percentage increase after trying to control its own costs.
Yesterday, HMSA Executive Vice President Steve Van Ribbink released a statement acknowledging the state's largest health insurer understood these are difficult times for business owners.
"The last thing we want to do is make things harder," Van Ribbink said. "But the fact is that this adjustment is necessary, and it's good to know that an outside independent party like the state Insurance Division agrees that it is necessary."
HMSA has reported losses in eight of the past nine quarters because of steadily rising costs for healthcare and increases in what it pays out on claims filed by healthcare providers.
Yesterday, the insurer said it was paying out 95 percent of every dollar collected in member dues and that it lost $36 million in the past year. As a nonprofit, HMSA tries to break even on an annual basis.
The insurer has been under fire from businesses that are mandated to provide health coverage for full-time workers and healthcare providers who say reimbursement rates aren't high enough. The rate hike for small businesses comes atop an average 10.4 percent increase last year.
HMSA also has been criticized for its executive salaries.
"I'm concerned that HMSA's executive team took their usual millions in salaries and bonuses, cried poor about their losses and then turned around and demanded the largest premium increase on some of Hawai'i's businesses in 20 years," said state Sen. Josh Green, a Kona emergency room physician and a frequent HMSA critic.
"They seem out of touch to me and should be audited by the state if they're going to remain a not-for-profit."
HMSA said the increases approved by the Insurance Division also included:
The insurer said the increases that were approved were in line with what it requested.
"We are currently in a situation where double-digit increases in healthcare costs are outpacing increases in member dues," Van Ribbink said.
"We're working hard to keep our administrative expenses low, increase our operational efficiencies and generate the greatest value for our members."
