HONOLULU -- The Hawaii Medical Services Association, the state's largest health insurer, plans to raise premiums for small businesses by nearly 8 percent. This would be another blow to Hawaii businesses already hurting from higher prices, rising taxes and the bad economy.

HMSA wants to raise the premiums for nearly 11,000 small businesses in Hawaii. HMSA officials claimed the company has recorded losses in the past four years, and needs the increase to keep even with rising health care costs.

“We cannot continue to sustain these kind of health care cost trends in recent years. It just cannot be done year to year at the pace that we are incurring,” said Steve Van Ribbink, HMSA executive vice president.

Darrell Ching and his wife Stephanie have run Novel T World in Ward Warehouse for 27 years. They've been successful selling T-shirts and novelty items, but said this past year has been the most challenging ever. An increase in health insurance rates will affect them.

“It affects how we hire. We would want to probably bring in people under twenty hours so that you wouldn't be required to pay health benefits with those rates as high as they are. In our case we're down to just a few part-time people as opposed to maybe having a full time person on staff,” said Darrell Ching

A number of small business owners said the same thing. If they have to pay more to insure full time employees, they'll just cut the full time workers and hire part time help, or just lay off employees.

“Well it's going to be really tough for us because even in normal times when there's an increase in any kind of expenses it's going to affect our profit margin. And the only thing we can do, we may to lay off employees cut expenses and so on. But there's only so much we can do,” said Eddie Flores, founder of L & L Drive-In.

And when it gets to the point that there is nothing more to cut, more and more business simply close.