Hawaii Medical Service Association recorded an $8.4 million profit in the third quarter amid rising medical costs and significant changes in the health care system.
The state’s largest health insurer said revenue jumped to $621.4 million from $512.3 million in the year-ago quarter, while expenses climbed to $568.6 million from $465.2 million. After factoring in higher administrative expenses — $50.1 million compared with $40.2 million — HMSA’s operating gain was $2.7 million, down from $7 million.
Investment gains of $6 million, slightly up from $5.4 million, boosted HMSA’s bottom line to $8.4 million, down 35.3 percent from $12.9 million in the year-earlier period.
The insurer, which covers more than 700,000 members, said its reserve grew to $457.9 million from $375.5 million due in large part to improvements in the stock market.
"The money we had left over after paying for member benefits and operating expenses was only 0.4 percent. That’s near break-even," HMSA spokeswoman Elisa Yadao said in an email. "HMSA’s gain looks like a lot, but when you put it into perspective, for every dollar you give us, we have less than a half a penny left over. And it’s not a profit, but rather put into a reserve for our members in case of emergency."
She added that administrative costs grew in the quarter as a result of more members as well as higher revenue and expenses.
HMSA is awaiting state approval to raise rates Jan. 1 by an average 1.2 percent — the lowest rate increase in more than five years — for about 90 large businesses covering about 78,000 people. HMSA also will boost premiums the same day for seniors with supplemental Medicare insurance coverage
The rate increases HMSA is getting "is more than offsetting payments to doctors and hospitals," said Paul Tom, president of health plan consulting firm Benefit Plan Solutions Inc.
