The state Insurance Division, which regulates health plan rates, approved a 35 percent rate hike for Hawaii Medical Service Association members and a 25.9 percent increase for Kaiser Permanente Hawaii's Affordable Care Act policies. HMSA originally filed for a 43.3 percent rate increase; the state granted Kaiser's initial request. The Insurance Division planned to announce the approval today.
"The bad news is that obviously represents what everyone would recognize is a really incredible increase and unsustainable pattern," said Dr. David Derauf, executive director of Kokua Kalihi Valley Comprehensive Health Center, which helps people enroll in Obamacare. "The good news is that for some people the government subsidies will defray some of those increases."
HMSA member Grant Togashi said the increase is inequitable.
"My situation hasn't changed (from last year)," he said. "Another gold plan from HMSA which I've taken this year comes with a $1,000 deductible, (and I've had) $115 in medical expenses which I've incurred in out-of-pocket costs year to date to satisfy the deductible. I hardly have had the need to tap my plan because, as a 62-year-old, I try to keep healthy by staying active and watching my food intake. Yet, each year is met with higher premiums. Where's the equity in all of this?"
Under the ACA, those with incomes low enough can qualify for federal subsidies to reduce the cost of coverage. The state didn't know the average subsidies Hawaii policyholders receive.
Health insurers are struggling with how to balance the pool of newly insured -- many of whom haven't had medical care in years -- with the population of healthier members to control premiums.
"What's happened here is that the people who are signing up for the ACA in Hawaii and in many states are much sicker than anticipated," Derauf added. "Insurance works by having a large pool of (insured), some of them healthy and some sick. The healthy people are already covered under our Hawaii law; most of them are working more than 20 hours a week, and they are eligible for heath insurance benefits under employment. In a state like Hawaii we simply don't have a large enough pool of uninsured to make it work (because there's a limited number of people to buy the Obamacare plans)."
HMSA spokeswoman Elisa Yadao said in an email that the increase for individual ACA plans will affect about 20,000 members, or roughly 3 percent of its 733,777 members.
"We've all been working to stabilize the costs of these plans," she said. "Other states are struggling with this as well. In Oklahoma, premiums will increase from 58 to 96 percent."
The higher rates don't affect Akamai Advantage members or those in pre-ACA policies (sometimes referred to as grandmothered or grandfathered health plans), or people who are covered through their employers.
A 40-year-old nonsmoker in the lowest-cost Obamacare plan currently pays $213.79 a month with HMSA and $236.24 with Kaiser. Those premiums would rise by $74.83 for HMSA and $61.19 for Kaiser.
HMSA proposed an average 49.1 percent rate hike -- the highest it ever requested -- for 2016 Obamacare plans, but the state reduced the increase to 27.3 percent. Kaiser, which has 249,000 members, proposed an 8.7 percent premium hike for this year but was granted a 34.4 percent increase by the Insurance Division. The division decided the Kaiser request was too low to cover costs.
"Health care costs continue to rise at a significant pace, while health care utilization in ACA plans continue to be extremely high, not only in Hawaii but nationwide," said state Insurance Commissioner Gordon Ito in a news release. "This highlights a challenge in balancing these rising health care costs with ensuring affordable access to health insurance. While we hoped to maintain rates at a more stable level, we found the premium increases necessary for carriers to continue to provide ACA individual coverage within the state. With the rising costs of the health care delivery system, rates must also be set at levels that are adequate to prevent insolvency and keep competition in the market."
Open enrollment for consumers to change health plans starts Nov. 1, and the rate hikes take effect Jan. 1.
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