HONOLULU (HawaiiNewsNow) – Every company providing health coverage for Hawaii employers is raising rates higher than inflation as most Hawaii workers sign up for insurance during open enrollment.
Costs for HMSA, the company that insures most Hawaii workers, are going up much less than expected.
The Hawaii Insurance Division approved the new rates last week.
HMSA rate lowered after review
HMSA had originally proposed a nearly 20% rate increase for the small employer plans but later reduced the request to about 15%. Reviewers determined HMSA was being too pessimistic about its financial future.
“There was an overestimate of estimated losses for the year 2027,” Insurance Commissioner Scott Saiki said.
HMSA’s final rate for employers with fewer than 50 workers came down from 14.9% to 6.3%.
“HMSA has good news to share,” Dale Goya, HMSA vice president for account management and sales, said in a video statement. “This is proactive action that HMSA has taken to reduce rates based on a clear picture of expected costs for this small business population.”
Other insurers’ increases
Kaiser Permanente asked for and received an increase of 6%. HMAA’s increase is 16%. UHA’s is the largest at 19.5%.
In a statement, UHA said, “From 2022 through 2025, we held our rate increases to single digits as Hawai’i was recovering from the pandemic.”
“Even with the rates just approved by the Hawai’i Insurance Division, we expect that our rates will remain the lowest in the state,” the statement said.
Concerns from business and consumer advocates
Advocates for consumers and businesses said they remain alarmed at the increases.
“We are hearing more and more from our businesses that, yes, the health care insurance is on the rise and what can we do to mitigate that?” Sherry Menor of the Chamber of Commerce of Hawaii said.
Democratic state Rep. Scot Matayoshi, chair of the House Consumer Protection & Commerce Committee, pointed to HMSA’s share of the market.
“There’s the UHAs and HMAAs out there, but HMSA is such a huge market share, I think 70% plus, that when HMSA raises its rates, it’s pretty devastating across the board,” Matayoshi said.
What determines premiums
The rising cost of care is pushing up the rates. The actual premium paid by employers and workers depends on their companies’ claims history and sometimes negotiations with the insurer.
“So if it’s a high-risk employer, you’re gonna see a higher premium,” Saiki said.
The rates are also designed to ensure the insurers make about a 3% profit.
“It needs to be a rate that allows an insurance company to remain solvent so that it can pay off claims,” Saiki said.
Debate over competition
Matayoshi wondered if more competition would help by eliminating premium taxes that keep for-profit mainland insurers out of Hawaii.
Saiki opposes the idea. “We may be faced with companies — large national companies — that come here and maybe just try to gouge us,” he said.
Saiki said he’s heard complaints about mainland providers raising rates while denying many claims.
Matayoshi agreed guardrails would be needed.
“I would want to make sure that if we were to lift this tax and allow them to come in to compete in the free market, that we also put on some pretty heavy guardrails to make sure that we don’t let in any bad actors,” Matayoshi said.
Experts say rising health care costs, an aging population and fewer younger people paying in could cause the current system to collapse and be replaced by massive government programs.
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