Hawaii Medical Service Association, the state’s largest health insurer, plans to raise premiums by an average 3.6 percent next year for 84,000 members who work at large companies.

HMSA increased premiums 14.8 percent this year for large businesses and 11.7 percent last year but said it believes the rates have now caught up with costs, which have moderated after escalating in 2009 and 2010.

The increase must be approved by the state Insurance Division.

HMSA’s announcement of a proposed rate increase comes a day after Kaiser Permanente Hawaii, the state’s second-largest health insurer, said it is seeking an average 8.8 percent premium hike for about 162,000 members on Jan. 1.

"It’s so discouraging sometimes because it seems like both medical carriers increase rates whenever they want to," said Tim Lyons, president of Hawaii Business League, an advocacy organization of 1,000 businesses. "This is something everybody’s got to have. People are totally panicked without insurance. They (insurers) certainly don’t seem to temper those increases very much."

Despite business objections to higher health insurance rates, both HMSA and Kaiser increases are in line with national trends, said health care analyst Marilyn Matsunaga, a former administrator for the Hawaii State Health Planning & Development Agency.

A recent annual report on medical cost trends by PricewaterhouseCoopers’ Health Research Institute projects U.S. employers will see health costs climb by 8.5 percent in 2012, compared with an 8 percent rise in 2011.

"In the case of HMSA they’ve come off of three years of large increases, so it’s not surprising that they’re finally beginning to moderate," said health care consultant Paul Tom, president of Benefit Plan Solutions Inc.

Steve Van Ribbink, HMSA’s chief financial officer, said his company was able to keep its rate increase request well below the last couple of years because the economy is improving. When the economy is bad, members worry they might lose their jobs and health coverage. That leads some to fast-track medical tests or procedures out of concern they will be unable to afford treatment if they lose their insurance.

"There was a lot of anxiety about the economy that helped to drive some of the health care trends such that we had to have higher rates," said Van Ribbink. "We think that as bad as it is, people are probably feeling better about Hawaii’s economy at this point. To the extent there was a lot of people utilizing services in 2010 and 2009, they’re not seeking services as aggressively in 2011 and 2012."

Van Ribbink forecasts health care costs for Hawaii will rise between 6.2 percent and 7.5 percent next year.

HMSA imposed an average 3.7 percent premium increase for 9,600 small businesses that employ 89,110 workers on July 1. The company has a total of 688,625 members, most of them government employees or beneficiaries.

Van Ribbink said HMSA’s new pay-for-performance reimbursement structure — which ties payments to the quality of service delivered by health care providers — is having a favorable effect on medical costs.

HMSA posted a $5.8 million profit in the second quarter, reversing a $4.1 million year-earlier loss.