Insurance rates rise 7 percent per year

Hawaii’s small-business health insurance rates have increased an average 7 percent annually from 2003 to 2013, according to the latest report by the Hawaii Health Information Corp.

The average annual increase in premiums since 2003 for the state’s largest health insurers, Hawaii Medical Service Association and Kaiser Permanente, was 7.2 percent and 7.8 percent respectively, said HHIC, which collects and analyzes local health care data.

HMSA’s average premiums per person rose to $304 a month in 2013 from $180 in 2003, while Kaiser’s rates jumped to an average $316 a month from $177 during that same period. Hawaii businesses pay the bulk of premiums for employees.

HHIC’s latest report projects that insurance rates will rise further due to increasing health care costs and fees related to the Affordable Care Act, also known as Obamacare, which has resulted in businesses “paying an increase of more than 3,000 percent to cover their portion of employer-based health care coverage since 1974,” HHIC said in the report. HMSA’s ACA fees in 2014 totaled $65.4 million. The insurer attributed roughly 4 percent out of a 9 percent small-business rate hike that year to the ACA.

“The Affordable Care Act, while a real advance for the rest of the country, is placing a special burden upon Hawaii, which has already achieved much of what the ACA has set as health goals for the nation,” Peter Sybinsky, chief executive officer of HHIC, said in a press release. “These burdens … all make it more difficult to maintain the historical commitment to universal coverage that has made Hawaii a leader in health reform. As a community, we need to work together to respond appropriately to this major challenge.”

Hawaii’s Prepaid Health Care Act of 1974, which requires employers to provide medical coverage for employees who work at least 20 hours per week, has driven down the state’s uninsured rate to among the lowest in the nation. Employers pay an 85 percent share of individual employee insurance costs since state law doesn’t allow workers to spend more than 1.5 percent of gross wages on health insurance premiums.

The most significant ACA-related expense for health insurers subsidizes coverage for eligible individuals who purchase plans on the Hawaii Health Connector, the online insurance marketplace created by Obamacare. The insurance provider fee totaled $8 billion nationwide in 2014, with roughly $39 million collected from HMSA. The fee is projected to rise 2 to 3 percent per year to cover health care premium subsidies and reach $14.3 billion in 2018.

Other ACA insurer fees passed onto consumers and businesses subsidize high-risk enrollees (Obamacare prohibits insurers from denying individuals based on pre-existing conditions) and finance health insurance exchanges.

“Those fees basically are cost inflators, each one of them,” Sybinsky said. “These many fees imposed upon insurers translate to even larger increases in premiums for Hawaii’s insured population than would have occurred as a result of rising medical costs alone. This will adversely affect not only the cost to beneficiaries, but also the cost to their private employers.”