HMSA asks 49% hike on care act plans

June 03--Hawaii Medical Service Association is proposing an average 49.1 percent rate hike -- the highest it has ever requested -- for 20,935 members in Obamacare plans for 2016.

HMSA's proposed monthly premiums for individuals who purchased coverage through the Hawaii Health Connector, the state's health insurance exchange created by the Affordable Care Act, or Obamacare, will rise to an average $413.81. The increases range from 32.5 percent for the Bronze HMO (health maintenance organization) plan to 52.9 percent for a Silver PPO (preferred provider organization) option.

The state's largest health insurer said in a note posted on its website Monday that the rate will affect about 3 percent of its members and is necessary to cover the "much higher than expected medical costs" for this group. HMSA offers 11 plans ranging in price from $275.57 to $610.27 on the exchange.

"They're nuts," said Grant Togashi, a 60-year-old retiree living in Hilo who is covered under HMSA's $563-per-month Gold plan, which has a $1,000 deductible before benefits are paid out. "I've used up about $125 of the $1,000 deductible this year. Last year I barely hit the deductible," he said. "Essentially in 2014 most of the expenses I incurred ... I had to pay for out of pocket. They're making money off of people like myself because I'm relatively healthy compared to the rest of the HMSA subscribers. How can they justify that big of an increase when I've barely tapped the plan?"

State Insurance Commissioner Gordon Ito, who regulates health plan rates, said the proposed increase for the ACA individual plans will be closely scrutinized.

"The Insurance Division will actively seek reductions to the proposed request, where possible, to ensure fairness to all parties involved," Ito said. "If medical expenditures paid out for health care services under the ACA individual plan are too high, the division's ability to drastically reduce this requested increase will be limited."

In a federal regulatory filing HMSA said it lost money on these policies and that it expects the requested rate increase to make the ACA individual plans financially sustainable, including a "small gain" of about 3.2 percent. The insurer told regulators it has also made several benefit changes, primarily increases to the deductible and out of pocket maximums.

"At HMSA, we understand the frustration of rising health care costs," said Michael Gold, HMSA president and chief executive officer, in the statement posted online. "Our decision to ask for this premium increase was truly difficult."

The insurer said it "explored every alternative for a smaller premium, but ultimately had to ask for this increase" because the exchange population is less healthy than expected.

The ACA requires insurers to offer coverage to people who previously could not get private health insurance because of pre-existing medical conditions.

"While we realized that many of the newly insured individuals would need much medical care, we also assumed that overall costs would be moderated by others using fewer medical services," HMSA said in the filing. "This has not been our experience. The small number of people left without coverage often had serious health conditions."

The ACA requires most Americans to enroll in a health insurance plan or pay a tax penalty.

The company said that nearly everyone in Hawaii already has medical insurance through their employer or Medicaid and Medicare, the government insurance programs for low-income residents and seniors.

In addition, HMSA said this is the first time it has been able to price the plans knowing the actual benefit costs for these members, who use "substantially more medical services and prescription drugs."

Also, 4,000 members from the Compact of Free Association, originally on Medicaid, purchased individual health plans from HMSA this year through the Connector. The COFA migrants from the Federated States of Micronesia, the Republic of the Marshall Islands and the Republic of Palau, who often have high rates of chronic diseases, are expected to increase total claims by 4.5 percent, HMSA said.

"Many of these members have conditions that will likely require intensive medical services and expensive prescription drugs," Gold said. "The ACA has helped thousands of Hawaii residents get health coverage. That's good for the well-being of our state. But it comes with a price that we're seeing now."

Jeff Kissel, the Connector's executive director, said higher medical costs were to be expected as the first people to enroll in ACA policies nationwide were those who were the sickest.

"So you would expect in the early stages of implementation of the act it would cost more to provide services for these people," he said. "But in the long run the insurance companies are going to prosper because their costs are going to come down as more people who don't have health issues enroll because of the increasing tax penalty and the availability of coverage on the exchanges. The industry should take a longer-term view because they'll eventually be enrolling healthier individuals."

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