Analysis of costs showed Kaiser rate hike request to be excessive
A July 13 article in The Maui News reported that Kaiser
Permanente may delay the opening of its new clinic "as a result of
Kaiser's requested rate increase being turned down by the state
I was well aware of Kaiser's plans for new capital improvements,
including improvements to and openings of new clinics. I disapproved
Kaiser's request to charge their members a very large 14.5 percent
increase in rates because it was excessive and not supported by our
I approved an increase of 11.7 percent because our analysis determined
that it provided a rate that was adequate to ensure that Kaiser had
sufficient reserves to provide the services and coverage promised to
members in their plan as well as the necessary improvements to clinics
and other infrastructure.
I have no power over the main causes of premium increases, which are
rapidly rising costs of new medical equipment, hospital and drug costs
and litigation costs. But by creating more competition among insurers,
more alternatives for consumers and by fighting insurance fraud, we can
significantly lower premiums consumers have to pay.
We have convinced a new health insurer to do business in Hawaii to
provide more competition. We have worked with the Prepaid Health Care
Advisory Council to approve alternative plans to give people choices.
We convinced the Legislature to pass the Trade Association Health Plan
Bill so companies could band together and negotiate better rates
through their trade associations. We were unable to get a fraud bill
passed this year, but we will pursue it again next year because we know
that states that have aggressively pursued fraud have have seen a
significant reduction in premiums.
I always keep in mind the tremendous impact that rising health
insurance rates have on the people of Hawaii, our families and our
businesses. That is why we take a very hard look at any request for a
rate increase and do a very thorough analysis of the request to ensure
that any increase is absolutely necessary.
J. P. Schmidt
State Insurance Commissioner
Department of Commerce and Consumer Affairs Honolulu