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
http://pacific.bizjournals.com/pacific/stories/2004/02/16/smallb1.html
© 2004 American City Business Journals Inc.
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