HMSA, Kaiser in the red - Hawaii News Now - KGMB and KHNL

HMSA, Kaiser in the red

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Source: MGN Online Source: MGN Online
HONOLULU (HawaiiNewsNow) -

HMSA, Hawaii's largest health insurer, and Kaiser Permanente, the state's largest HMO, both ran in the red during the first quarter.

"Simply stated, the money we're collecting from members and businesses for their premiums is not enough to keep pace with the rising cost of health care," said HMSA CFO Steve Van Ribbink.

"Outside costs are tracking higher than expected," Kaiser said Thursday. "When our members receive care outside the Kaiser Permanente system we don't control those expenses, which have historically been much higher than inflation."

HMSA collected $637 million in premiums but spent more than that, despite lower administrative costs, and wound up with an operating loss of $9.5 million. Investment income covered much of that, leaving a net loss of $3.6 million.

Kaiser had revenue of $286 million but spent more than that, resulting in an operating loss of $1.8 million. Investment income covered most of that, leaving a net loss of $200,000.

Hawaii health care insurers and providers must clear their rate hikes with state regulators, who often grant a smaller increase than what was requested. Rate hikes typically kick on Jan. 1 or July 1.

With price inflation occurring more gradually, health insurers and providers typically perform better in the first and third quarters when their premium revenues are higher, less so in the second and fourth quarters.

HMSA has been modifying its contracts with hospitals to shift some compensation from procedures and tests to results. Kaiser has been undertaking capital projects to open or modernizes its medical centers.

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