HMSA earnings soar; Kaiser net slips

Nov. 16--Hawaii Medical Service Association members used fewer medical services in the third quarter, resulting in higher earnings for the state's largest health insurer.

HMSA, which covers 726,834 members, reported Thursday that it had $46.7 million in net income, up from $14.6 million in the year-earlier period. The company said its profit helped offset a year's worth of Affordable Care Act fees and taxes that amounted to $67.8 million recorded in the first quarter.

"We're seeing lower use of health care services, in some cases because our members are healthier, in other cases because our members have a better understanding of how to use their benefits to their best advantage," said Gina Marting, HMSA senior vice president and chief financial officer, in a news release. "We've made strategic investments in our members' primary care. We still have work to do, but all of these efforts combined are helping to keep premiums more affordable for everyone."

HMSA collected $878.3 million in premiums -- up from $821.2 million a year ago -- and paid $765.1 million for medical and hospital services and $74.9 million for administrative expenses. That compares with $737.5 million and $83.7 million, respectively, spent on benefits and administrative costs in the 2017 quarter. The result was a $38.3 million operating gain, up from just $18,104 a year earlier when HMSA was not required to collect ACA fees from members. HMSA pays those fees to the government, which subsidizes people who buy Obamacare plans.

In addition, HMSA's investment gains totaled $9.2 million, a substantial drop from $16 million in the same period last year.

The health plan's reserve, meant to protect members in the case of a public health emergency, grew to $561 million at the end of the quarter, or $772 per member, from $462.1 million, or $631 per member.

Meanwhile, Kaiser Permanente Hawaii -- both a medical provider and insurer with 252,977 members -- saw its quarterly loss slightly widen to $500,000 from $300,000 in the year-earlier quarter.

The state's largest health maintenance organization collected $394.3 million in premiums, up from $370 million, and spent $396 million in medical expenses, up from $371.7 million. The HMO posted a $1.7 million operating loss, the same as the year-ago period, and reported $1.2 million in income from investments, down from $1.4 million.

Kaiser said its quarterly results were in line with expectations as it continues to make significant investments in facilities. Its most recent expansion into West Oahu includes the development of a $60 million medical office building in Kapolei. The 40,000-square-foot project, which will include primary and specialty care, as well as prevention and wellness programs, is scheduled to be completed in 2021.

HMSA

THIRD-QUARTER NET

$46.7 million

YEAR-EARLIER NET

$14.6 million

KAISER

THIRD-QUARTER LOSS

$500,000

YEAR-EARLIER LOSS

$300,000

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