Medical premiums for roughly 78,000 people covered by Hawaii Medical Service Association could rise by an average 1.2 percent — the lowest rate hike in more than five years.
The state’s largest health insurer is awaiting state approval to raise rates for about 90 large businesses with 100 or more employees renewing health plans Jan. 1.
HMSA boosted rates by 3.6 percent this year for large businesses and by 2.6 percent July 1 for 9,500 small businesses whose total employees number more than 110,000.
“It is a fairly modest increase. Usually if they do an increase, it’s higher,” said Tish Uyehara, marketing director at Armstrong Produce Ltd., which offers HMSA coverage to more than 250 employees statewide. “Of course, nobody likes an increase in business expenditures, but … we offer this as a benefit to our employees and therefore we want to continue that.”
A number of factors have contributed to the lower rate hike, including the fact that overall medical costs are increasing at a slower pace, HMSA spokeswoman Elisa Yadao said in an email.
“For several years now we’ve had programs in place aimed at slowing the growth of medical costs,” she said. “These include our patient centered medical home program and our pay-for-quality programs with doctors, hospitals, and other health care providers. We’re optimistic that these programs are now starting to show results.”
The pay-for-performance reimbursement model ties HMSA’s payments to the quality of service delivered by health care providers. HMSA offers providers a bonus if they can demonstrate an improvement in the quality of patient care with measures such as decreased hospital readmission rates and avoidance of bloodstream infections, which should help reduce costs.
HMSA’s patient-centered medical home is a model that focuses on disease prevention in which a team of providers strives to transform how primary care is delivered, specifically coordinating care within a group that includes nurses, hospitals and specialists.
HMSA’s proposed increase, under review by the state Insurance Division, which regulates health plan rates, follows a 5.3 percent premium hike request by Kaiser Permanente Hawaii for more than 150,000 members renewing employer-sponsored health plans Jan. 1.
Meanwhile, the state is preparing to launch a health insurance exchange, known as the Hawaii Health Connector, designed to provide individuals and small businesses access to more affordable group health insurance rates.
The federal Patient Protection and Affordable Care Act requires states to set up health insurance exchanges, one-stop shops designed to match uninsured individuals to subsidized health care plans by January 2014. The exchange could be used by as many as 100,000 uninsured Hawaii residents to compare and select their health care coverage.
“We’re very hopeful the health insurance exchange is going to offer us some low-cost alternatives.
Businesses of all sizes are looking at ways to lower their employment costs,” said Melissa Pavlicek, Hawaii state director for the National Federation of Independent Business, which represents 1,100 local companies. “In the meantime this news is very worrisome because we are still trying to make ends meet from the bad economy.”