Health insurance premiums on the rise

More than 320,000 Hawaii workers and individuals will pay higher health insurance premiums starting Monday.

Roughly 150,000 Hawaii Medical Service Association members covered by large employers will see an average 9.3 percent rate hike, while about 15,000 others enrolled through small businesses will pay 11.2 percent more. Another 4,000 individual plan members will see premiums rise by an average 16.9 percent.

Kaiser Permanente Hawaii — both an insurer and medical provider — will boost premiums by 6.4 percent for 140,390 members covered by large employers and by an average 5.9 percent for 19,400 workers covered by small businesses.

“We need to take action to address the health care cost drivers as these increases are not sustainable,” said state Insurance Commissioner Gordon Ito, who regulates health plan rates. “These rate increases illustrate the need to bend the health care cost curve. Over the last 30 years we have seen health insurance premiums doubling every 10 years. Ideally, rates would at a minimum match wage and inflation rates of around 2 to 3 percent versus the average 6 to 9 percent increase in health care costs annually.”

Separately, about 34,000 individuals will see premiums jump 19.8 percent for HMSA and 24.1 percent for Kaiser’s “Obamacare” health plans. The health plans report averages, so some groups will see higher rate adjustments, while others will be lower.

“Quite frankly, it is misleading the public. They mislead the consumer with saying ‘average.’ Generally from what I have seen … they’ve always been above (the average),” said Paul Tom, president of Benefit Plan Solutions, a health insurance consultant that reviews benefits for businesses.

He added that under the state’s Prepaid Health Care Act, which requires employers to provide health insurance to employees who work 20 hours or more a week, businesses are forced to pay the higher rates.

“The employer doesn’t have a choice. The employer is stuck with having to pay whatever the insurer charges,” Tom said. “It determines whether they can make a profit or it narrows the profit, but that’s the expense of doing business in Hawaii.”

Mike Stollar, who will become HMSA’s president and chief executive officer Monday, said insurers are grappling with higher costs as the state’s aging population uses more medical benefits, while prescription drug costs continue to escalate. Health plans are also dealing with fees associated with the federal Affordable Care Act, which requires that most Americans get coverage or pay tax penalties. The federal mandate is set to be repealed in 2019 as part of the tax overhaul so residents won’t incur tax fines for being uninsured.

“It’s imperative that we work side by side with everyone in our community to improve health here in Hawaii and keep health care costs affordable for everyone,” Stollar said.

To this end both HMSA and Kaiser have started health and wellness programs to encourage members to eat better and get more exercise to avoid chronic diseases and other ailments that drive up the costs of health care.

“The rising cost of health care is a concern for everyone and it is more important than ever to advance our mission on affordability,” said Kaiser spokeswoman Laura Lott. “New medical technologies, and higher costs of prescription drugs — including new, high-cost specialty drugs — remain key expense drivers impacting rates.”