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Kaiser proposes to increase rates by 12.6 percent

The hike would affect about 6,800 employers, while individual rates would rise 8.6 percent

By Kristen Consillio

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Kaiser Permanente Hawaii, the state's largest health maintenance organization, is seeking to raise rates on Jan. 1 by an average 12.6 percent for 164,000 members statewide.

The increase would be the largest in seven years and comes as many businesses are trying to recover from one of Hawaii's most severe economic downturns in recent history.

The proposed increase, which must be approved by the state Insurance Division, would affect about 6,800 employers enrolled in Kaiser.

Kaiser, which lost $5.8 million in the first half of the year, also is seeking an average 8.6 percent rate increase for about 14,000 individuals. Kaiser's total membership is more than 226,000.

"If we could lessen the impact (on employees), we would, but not in this recovery stage. ... We just cannot," said Robyn Oshita-Vranesevic, administrative director of T&T Tinting Specialists Inc., whose 11 workers enrolled in Kaiser's medical, dental, drug and vision plan will face up to a 72.7 percent spike in their premium contributions to $114 per month from $66 on Nov. 1.

RAISING THE BAR

Kaiser rate increases through the years:

YEAR INCREASE
2011 *12.6%
2010 10.7%
2009 4.9%
2008 2.0%
2007 3.75%
2006 3.0%
2005 11.0%
2004 11.7%
2003 9.8%
* Proposed

Source: Kaiser Permanente Hawaii

Kaiser's previous highest rate increase -- 11.7 percent -- was in 2004. In recent years, Kaiser has been able to keep increases to single digits, including a 2 percent raise that went into effect in 2008, the smallest since boosting premiums 2 percent in both 1998 and 1999. Kaiser's rates climbed 4.9 percent in 2009 before jumping 10.7 percent this year.

"The last thing we want to do is raise rates, especially in these tough economic times," said Kaiser spokeswoman Laura Lott. "Unfortunately, with health care costs continuing to rise, this adjustment is necessary. Kaiser Permanente continues to work aggressively to manage expenses and leverage technology to reduce costs."

The rate proposals are under review by the state Insurance Division.

"Any increase negatively impacts businesses because ultimately they pay for the increased costs, so we're going to really be reviewing the requested rate increase," said Insurance Commissioner Gordon Ito.

Passing on increases in health insurance costs to workers is difficult for businesses because of limits built into Hawaii's Prepaid Health Care Act, which curtails an employee's health premium contribution -- not including add-on coverage such as dental, drug and vision -- to no more than 1.5 percent of gross wages, according to Tim Lyons, executive director of the Hawaii Business League, a small-business advocacy group with 1,100 members.

"It's another cost that businesses have to absorb, and at this stage in the economy, very few businesses have the luxury of being able to afford more costs without repercussions," he said. "This is just going to be an added cost that goes against the bottom line of the business."

T&T Tinting's employees have the option of reducing their out-of-pocket contributions by limiting their benefit plan. The company covers 100 percent of the basic plan for most of its 25 employees.

"Medical has always been kind of like legalized gambling: You want it just in case something happens," Oshita-Vranesevic said. "On the other (hand), we give employees the option of going with a lesser plan."






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