Hawaii carriers ask for rate increases in 2018
Preliminary rate filings for 2018 show an average increase of over 15 percent for Hawaii plans.
Kaiser Foundation Health Plan has requested an average rate increase of 19.9 percent, including rate requests for 19.52 and 20.19 percent increases for its HMO individual plans.
Kaiser explains in its filing that in 2016 claims costs exceeded premiums by over 40 percent. Administrative expenses and a $16 million risk transfer payment in 2016 added to company losses.
Given the magnitude of these losses, the filed 2017 rate increase is not expected to be sufficient to cover medical and other costs and risk adjustment transfer payments associated with Kaiser’s ACA individual insurance block. The filed 2018 rate increase premium is necessary so that premium will be close to sufficient to cover medical and other costs in that year, resulting in a small negative margin (approx. -0.9%).
Hawaii Medical Service Association has requested an average rate increase of 27.1 percent, including proposing increases of 25.33 percent for its PPO individual plan and 32.89 percent for its HMO individual plan.
According to HMSA’s rate filing:
Our requested rates include only the amounts needed to cover the expected health care benefits of our members, the cost of administering their benefits, expected Affordable Care Act (ACA) fees, a small charge to help manage the risk of offering benefits to this population, and a small margin that will allow us to continue replenishing the HMSA reserve.
HMSA lost $48 million in 2015 and 2016 in individual ACA plans, and expects continued losses in 2017.
HMSA also attributes the rate increase to the uncertainty around cost reduction subsides, which HMSA expects not to be funded in 2018, and the individual mandate. Other challenges include the increase in ACA fees and the decrease in risk adjustment transfer.