Hawaii Medical Service Association lost $5 million in the third quarter, though strong reserves continue to buoy the health insurer’s financial viability.

The health plan’s earnings reversed a $10.4 million year-earlier gain.

The state’s largest health insurer blamed the loss in part to increasing medical and prescription drug costs and higher-than-expected claims for individuals covered under the Affordable Care Act, or Obamacare.

“We can’t afford to continue at this pace,” Gina Marting, HMSA’s senior vice president of accounting and finance, said in a news release due to be released today. “This isn’t the first time HMSA has faced challenges. We understand challenges and know what needs to be done.” 

HMSA collected $748.8 million in premiums in the quarter ended Sept. 30, and spent $687.7 million to pay doctors, hospitals and other health care providers. That compares with $712.6 million in revenue collected a year earlier and $658 million in benefit expenses.

Administrative expenses in the quarter totaled $64.9 million, up from $56.8 million in the year-earlier quarter, while Affordable Care Act fees and taxes totaled $5.1 million, down from $6.3 million.

The company, which has 727,321 members statewide, reported an operating loss of $8.9 million, but investment income of $2.5 million helped decrease the bottom-line loss.

At the end of the third quarter, HMSA’s reserve stood at $330.6 million, or $455 per member.