Hawaii’s middle-income earners will get hit the hardest by health insurance rate hikes next year under President Barack Obama’s health care law. 

The state announced last week an average 27.3 percent jump in premiums for Hawaii Medical Service Association’s individual members and a 34.4 percent increase for Kaiser Permanente members in Affordable Care Act plans for 2016. 

"It’s a mistake. It’s very shortsighted to raise premiums excessively right now," said Jeff Kissel, executive director of the Hawaii Health Connector, the state’s health insurance exchange established to enroll people in "Obamacare" coverage. "It’s really targeted at the working class. It’s a huge burden on them, and I don’t think it’s fair."

Those affected the most are the ones not covered under an employer and whose incomes are too high to qualify for Affordable Care Act subsidies or Medicaid, the government health insurance program for low-income residents. It also hits early retirees, who are not yet 65 and not eligible for the federal Medicare program, which provides insurance coverage for the elderly. 

Grant Togashi, a 61-year-old retiree living in Hilo, is covered under HMSA’s $563-per-month Gold plan, which has a $1,000 deductible before benefits are paid out. He said while 27 percent is a "hefty increase," it is reasonable given HMSA’s original proposal of a 49 percent increase, which was lowered by regulators at the state Insurance Division. 

"I would have been disappointed — and irate — had the 49 percent proposed increase gone through, enough to make me rethink my choice of an insurance carrier for 2016," he said. 

The U.S. Department of Health and Human Services said 61.4 percent of Affordable Care Act enrollees received financial assistance with an average subsidy of $195 per person per month. The health care law provides tax credits to help eligible individuals lower the cost of coverage. 

But Kissel is concerned that the costs will be too high for middle-income individuals who don’t qualify for subsidies, and they might opt to pay the penalty and become uninsured. 

There is a penalty added to the federal income taxes of those who do not have health coverage. In 2016 the minimum penalty for an individual is $695. The maximum penalty per family is $2,085, according to healthcare.gov. 

Individuals earning $18,699 or below qualify for free coverage under the state Medicaid program. Those who earn above that income level can get a subsidy to help pay their health insurance premium, but the subsidy is phased out as their income increases. 

Insurers typically offer at least four levels of plans, starting with the least costly bronze plan, followed by the silver plan, then the gold plan and, finally, the most expensive platinum plan. Estimated 2016 premiums for a 55-year-old nonsmoker on a silver plan will range depending on income. If he earns $30,000, his premium is only $232.70 per month with the help of Affordable Health Care subsidies. If he earns $50,000, the same plan costs $453.70 per month because the subsidies are reduced. 

"The average worker is suffering the rate increase a lot more than the person who is receiving subsidized health care," Kissel said. "For the 39 percent who don’t (qualify for subsidies), they’re paying the full amount of the increase, and they don’t get a tax deduction. When you look at normal people who aren’t able to have employer-paid insurance and aren’t eligible for subsidies, it’s going to be more of a challenge for normal middle-class people to afford it." 

Despite the large increases, a Health and Human Services spokesman, who asked not to be further identified, said in an email that the Affordable Care Act plans are richer in benefits and the program has helped many more get coverage. 

"Prior to the Affordable Care Act, we lived in a world where double-digit premium increases were the norm, and that was often for inferior policies and policies that charged a higher premium or denied coverage to consumers entirely due to a pre-existing condition," the HHS spokesman said in an email. "The Affordable Care Act overhauled the way insurance companies treat consumers by requiring insurers to cover people with pre-existing conditions, ending discrimination based on gender, and allowing only limited variation in premiums based on age. Thanks to the Affordable Care Act, all Americans can shop around for the best deal on the marketplace regardless of their medical history." 

However, Kissel fears the effect of next year’s rate increases will drive more Hawaii residents away from purchasing medical insurance. 

"It’s going to discourage the people who need this insurance from buying it, and they will continue to use the emergency room as their primary doctor," he said. "The consequence of that is you will have fewer healthier people buying coverage and more people who are ill buying coverage, which will further drive up costs. A rate increase this size is going to hurt the insurance and medical industry. It’s not going to help them." 

The new premiums for individual plans take effect Jan. 1. Open enrollment begins Nov. 1. Individuals who purchased coverage this year through the Hawaii Health Connector, the state’s troubled exchange, which is ending operations, must re-enroll for 2016 through the federal website, healthcare.gov.