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From the February 13, 2004 print edition
Rate hike likely to impact small business
HMSA proposes 9.6 percent to 12.1 percent rate increases for health plans
Kristen Sawada

Hawaii Medical Service Association wants to raise rates by 9.6 percent for most small businesses that renew health plans on July 1. HMSA also is seeking a 12.1 percent increase for its HMO product, Health Plan Hawaii.

HMSA filed for the premium increase with the state Insurance Division for community-rated groups in its most popular Preferred Provider Plan, which provides drug, dental and vision benefits.

The increase would put premiums for a single person at $317.12 a month, $634.24 for two people and $951.36 for a family.

If approved, the 9.6 percent increase would affect more than 11,000 small businesses statewide.
"I'm very disappointed that they came in for a raise," said Christine Camp Friedman, principal of Avalon Development & Consulting and chairwoman-elect of The Chamber of Commerce of Hawaii. "The investment climate has gotten significantly better; my thought was there was going to be some cushion and that they wouldn't have to come in with a high increase."

HMSA says it pays 93 cents for benefit expenses for every dues dollar collected.

"So if those costs are going up at a rate of 9 percent to 10 percent, it should come as no surprise that we need to have our dues rates go up by 9 percent," said HMSA Chief Financial Officer Steve Van Ribbink. "They need to keep pace with the underlying increases in benefit expenses."

The Insurance Division last year denied HMSA's request for an 11.5 percent rate increase for small businesses renewing last July and instead approved a 9.87 percent rate hike.

"The trend is still going up but it's not going up as rapidly as it had been," Van Ribbink said. "We hope to see the underlying benefit expense trends decrease in about six months."

Nearly 3,000 Hawaii employers saw insurance rate hikes as of Jan. 1, as businesses renewed plans with the state's four largest health insurers.

Premiums increased 9.7 percent on average for 140 large businesses enrolled in HMSA's most prevalent medical, drug and vision plan.

The division also approved University Health Alliance's 8.2 percent premium hike for medical, drug and vision coverage -- the majority of member plans -- and a 7.2 percent increase for its medical plan, affecting about 495 renewing employers and 20 new groups.

Kaiser Permanente Hawaii still is waiting for approval on a 14.5 percent average rate hike for 2,000 employers renewing this year and Hawaii Management Alliance Association has requested a 9.5 percent rate hike for about 300 businesses.

"[The increases affect] small businesses particularly and we don't have anywhere else to go," said Camp Friedman, who's company offers HMSA to its eight workers but can't afford to pay for family coverage. "Small businesses are also facing workers' comp increases, liability insurance availability and increases, so it's all around. They're just getting hit left and right so of course this is a significant hit for us because you're seeing a cumulative effect."

Health insurers began filing for rate adjustments with the Insurance Division about a year ago under a rate regulation law. The division has 90 days to approve or deny rate adjustments.

Reach Kristen Sawada at 955-8036 or ksawada@bizjournals.com

Pacific Business News (Honolulu) - February 16, 2004


© 2004 American City Business Journals Inc.



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