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Tuesday, September 16, 2014         

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Premium rate hikes need tough scrutiny


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The cost of health insurance in Hawaii is comparable to that in most other states, but the continuing increases are enough to cast doubts about whether the medical treatment is worth the price. Both of the state's major health insurers again this year are calling for price increases, and the public is entrusting to the state Insurance Division the increasingly important job of keeping premiums at justified rates.

Kaiser Permanente Hawaii has filed a proposal to the state division that it increase premiums for about 162,000 members by an average of 8.8 percent on Jan. 1, following increases of 10.7 percent in 2010 and 12.6 percent this year. Kaiser posted a $2.8 million profit in the second quarter, reversing a $5.1 million year-earlier loss.

Hawaii Medical Service Association wants to raise premiums by an average of 3.6 percent for 84,000 members working at large companies after increasing them by 11.7 percent two years ago and 14.8 percent this year. HMSA posted a $5.8 million profit in the second quarter, reversing a $4.1 million year-earlier loss.

The premium-increase trend is national. While Hawaii was rated recently by the American Medical Association as the nation's fifth-least competitive commercial health insurance market, health care analyst Marilyn Matsunaga said the proposed increases are in line with national trends. That may be so, but that scarcely makes it easier on consumers and employer providers.

The federal health care overhaul allows businesses with fewer than 25 employees and average wages under $50,000 to obtain tax credits of up to 25 percent of their premium costs for two years.

It seems more could be done to make businesses aware of this help to defray costs. A national survey indicates 65 percent of small businesses haven't bothered to determine eligibility. In Hawaii, many small businesses already offer health insurance systems to employees as required by the Hawaii PrePaid Health Care act, and could qualify as well.

When the federal health reform law takes full effect, it will require that nearly all Americans buy insurance or pay a penalty. Medical care for Hawaii's uninsured now is paid by the premiums of the insured. Presumably, that expense will no longer be absorbed by the insured, although that aspect of the bill faces constitutional challenges.

The new law also requires health insurance companies wanting to increase their rates by 10 percent or more to submit their request to state or federal reviewers. Hawaii already has a review system through the Insurance Division.

Federal funds are available under the new law to "improve how states review proposed health insurance rate increases and hold insurance companies accountable for unjustified premium increases," reports the U.S. Department of Health and Human Services. Additional funds are available to states to improve their rate review processes.

"For far too long," Health and Human Services Secretary Kathleen Sebelius said in April, "families and small employers have been at the mercy of insurance rate increases that often put coverage out of their reach."

The federal health care law has been credited with reducing premiums significantly in Maryland, Rhode Island and Oregon. Prior to the new law, insurance companies in some states could raise rates with little scrutiny.

The rate hikes currently proposed by Kaiser and HMSA in Hawaii don't appear to qualify the state Insurance Division for federal help this year — but they would have, in the last two years, when both companies imposed double-digit increases. At the very least, creation of such consumer protections provides a starting point that could be useful in the future, especially if the increase-ceiling were to be lowered.






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