State OKs Reduced HMSA Rate Hike
State Insurance Commissioner Gordon Ito on Friday approved an 8.9% rate increase for Hawaii Medical Service Association’s community-rated group plans.
HMSA proposed a 13.1% increase, said a Department of Commerce and Consumer Affairs press release, but Gordon reduced it by 4.2%, saving about $21 million in health care premiums for more than 110,000 consumers and 8,500 small businesses.
Community-rated group plans cover businesses with fewer than 100 employees.
About 5% of the rate increase is for medical costs and 4% for federal Affordable Care Act fees, said the DCCA.
Ito advised that “eligible small businesses should take advantage of ACA tax credits to help offset increasing insurance premiums while the credits are available.”
Ito also said, “we need to aggressively work toward reducing health care costs so premiums do not continue to rise year over year.”
Community-rate Group plan rates have gone up by an average of 6.65% every year since since 2007 (excluding the ACA fees) according to a DCCA chart.
“The Insurance Division has worked toward reducing premium increases while remaining sensitive to the financial solvency of Hawaii’s health insurers,” said Ito.
“Between 2007 and 2010, CRG rates increased 9.3% per year on average,” he added. “The rate increases significantly declined from 2011 to 2014, when premium increases averaged only 4% per year. Even with the addition of ACA fees, we are still seeing slower growth rates for CRG plan premiums compared to prior years.”
The new rate increase will be effective July 1.
CRG Rate Increases Excluding ACA Fees, 2007-2014:
Year / Rate Increase
2007 – 7.2%
2008 – 9.9%
2009 – 12.5%
2010 – 7.6%
2011 – 3.7%
2012 – 2.6%
2013 – 4.8%
2014 – 4.9%
The DCCA Insurance Division oversees the Hawaii insurance industry, issues licenses, examines the fiscal condition of Hawaii-based companies, reviews rate and policy filings, and investigates insurance related complaints.
HMSA issued the following statement in response to the state’s action:
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“We know that small business owners are struggling and doing everything they can to make sure their employees have a quality health care plan they can depend on. That’s why we work so hard to responsibly manage every health care dollar we collect from them.
“Taking care of their health care needs is our responsibility. And to fulfill that obligation, we must make informed assumptions about the amount of health care benefits our members will need and how much those benefits will cost. The premium increases that we submitted to the state Insurance Division were informed calculations of how much it will cost in the coming year to make sure our members have access to the best quality health care when and where they need it.
“There’s a lot of uncertainty in the health care market right now. Last minute changes to the Affordable Care Act, such as President Barack Obama’s decision to let small businesses choose between keeping their current health plans or moving to new ACA plans, has contributed to that uncertainty. It’s not surprising that different parties have different opinions in this type of situation. While the Insurance Division’s estimate of what it will cost to sustain the health care needs of our members is lower than our prediction, we’re both committed to working together to do what’s best for small businesses in Hawaii.
“We believe a responsible way to reduce costs is to improve the health of all Hawaii residents, thereby reducing the need for health care services. Our new care model, which focuses on giving more attention to HMSA members who are sick and use the most health care services, will help reduce the amount we spend. And our efforts to get 100,000 people to take the Healthways Well-Being Assessment™ will give us the information we need about Hawaii’s people. This way, we can focus our resources and efforts in the right places, making us more efficient and bringing us closer to our goal of a healthier Hawaii.”
–Dave Smith contributed.