Hawaii Medical Service Association seeks increase

HONOLULU — The Hawaii Medical Service Association is asking the state to approve a 12.8 percent rate hike on its health insurance plans for most small business workers.

HONOLULU — The Hawaii Medical Service Association is asking the state to approve a 12.8 percent rate hike on its health insurance plans for most small business workers.

The Honolulu Star-Advertiser reported Tuesday that the insurer says it needs the increase to pay for costs associated with President Barack Obama’s federal health care overhaul and increased drug costs. The increase would affect plans covering about 77,000 workers in small businesses.

“We understand that regardless of where the money is going, these increases are a financial challenge for all small businesses,” the insurer said in a letter last week to small businesses informing them of the request.

Elisa Yadao, the company’s senior vice president of consumer experience, said the insurer is trying to control costs.

“HMSA has one of the lowest operating costs of any insurer in the country and in 2013 we dedicated 95 cents of every dollar to our members’ health care,” Yadao said.

Commissioner Gordon Ito of the state Insurance Division said the agency is reviewing the proposed increase and how it will affect consumers and businesses.

He says the division under the Department of Commerce and Consumer Affairs will try to find a balance between the best interests of consumers and keeping the insurance company financially solvent.

“The key to avoiding large increases in the future will require finding a way to address rising health care costs, which continue to increase at a rate of 6 to 8 percent a year, while inflation has been averaging less than 3 percent over the last four years,” he said.

The increase is the largest requested by the company in at least the last five years. Last year, the company requested an increase of 8.6 percent on premium rates; the state approved a 6.7 percent increase.