State Insurance Commissioner Gordon Ito approved an 8.9 percent rate increase for Hawaii Medical Service Association's community rated group plans.
Initially, HMSA requested a rate hike of 13.1 percent. The reduction of 4.2 percent saves about $21 million for more than 110,000 consumers and 8,500 small businesses in health care premiums.
Approximately 5 percent of the 2014 rate increase is for medical costs and 4 percent for federal Affordable Care Act fees. The new rate increase will be effective July 1, 2014.
"Eligible small businesses should take advantage of ACA tax credits to help offset increasing insurance premiums while the credits are available," said Ito. "Moving forward we need to aggressively work toward reducing health care costs so premiums do not continue to rise year over year."
"The Insurance Division has worked toward reducing premium increases while remaining sensitive to the financial solvency of Hawaii’s health insurers. Between 2007 and 2010, CRG rates increased 9.3 percent per year on average," said Ito. "The rate increases significantly declined from 2011 to 2014, when premium increases averaged only 4 percent per year. Even with the addition of ACA fees, we are still seeing slower growth rates for CRG plan premiums compared to prior years."
CRG Rate Increases Excluding ACA Fees, 2007-2014
Year - Rate Increase
2007 - 7.2 percent
2008 - 9.9 percent
2009 - 12.5 percent
2010 - 7.6 percent
2011 - 3.7 percent
2012 - 2.6 percent
2013 - 4.8 percent
2014 - 4.9 percent
In the coming months, the Insurance Division will increase its efforts to educate consumers and businesses on how to address increasing healthcare costs. Even though medical and drug cost increases have slowed, healthcare costs still outpace inflation and wage growth. The addition of ACA fees further impacts the cost of providing health care, which ultimately affects the bottom line of local businesses.
The Insurance Division will host "Let’s Talk SHOP," a forum on the ACA and how it affects small businesses, on Friday, June 6. The insurance commissioner will answer questions business owners, managers and human resource personnel may have regarding their employees' health insurance options. For more information, visit cca.hawaii.gov/ins or call (808) 586-2790.