Wednesday, April 19, 2006


Small business beware: health insurance premium regulation is at stake in the legislature

Hawaii's health insurance market has been a virtual monopoly for years and years, with Kaiser dominating the HMO market and HMSA the rest. And like the rest of the industry, HMSA in particular varied its premiums at will. Not only did HMSA raise premiums to what the market would bear, but it could also lower them below cost so as to drive out competition.

It was to bring order to this market and to protect the profits of Hawaii's small business owners, that the legislature passed a law that required health insurers to submit proposed rate changes to the insurance commissioner.

The Mainland has apparantly caught up with Hawaii as far as consolidation goes. A report was released by the American Medical Association on April 17, 2006 that begins:

AMA study shows limited competition among health insurance companies
"The remarkable reduction in the number of competing health plans is troubling for doctors and patients, as competition drives innovation and efficiency in the health care system," said AMA board member J. James Rohack, MD. "Most alarmingly, in the combined HMO and PPO markets, 95 percent of metropolitan areas have few competing health insurers."

In addition, the study found that in 95 percent of markets, a single insurer had a market share of 30 percent or greater, and in 56 percent of the markets, a single insurer had a market share of 50 percent or greater. The AMA report, Competition in Health Insurance: A Comprehensive Study of U.S. Markets, analyzed 294 metropolitan health insurance markets against an index used by federal regulators for measuring market concentration. According to the federal index, markets that are highly concentrated have few competing health insurers.

"Patients do not appear to be benefiting from the consolidation of health insurance markets," said Dr. Rohack. "Health insurers are posting historically high profit margins, yet patient health insurance premiums continue to rise without an expansion of benefits."
Senate Bill 2917 goes to conference and to an uncertain future. This is the bill that started out simply removing the sunset provision of the rate regulation law.

Changes were made favorable to the insurers, in particular, in Rep. Bob Herkes' committee, where a complex and damaging amendment was sprung on the committee for a vote after hearing public testimony. The amendment was written, according to a Pacific Business News article Bill could dilute oversight on health insurance rates, by the insurance industry itself.

Senate conferees appointed for this bill are Sen. Menor, Chair and Co-Chairs Baker, Espero, and Hogue. The House has appointed its conferees: Reps. Arakaki, Herkes, Takamine are Co-Chairs and Rep. Marumoto. Rep. Herkes, in the last paragraph of the PBN article, reveals that he has not read and doesn't understand the current law, which is not a rate "cap" as he describes it in the article. It's disappointing to see him appointed to this committee.

If you are a small business owner, your profits are in their hands. If the Insurance Commissioner cannot effectively regulate rates, the big increases will come out of your pockets directly. Also, any employees paying premiums for family members will have to pay whatever HMSA wants them to pay.

Think about it.

Now is the time to contact these legislators, Speaker Calvin Say, and your own representatives to have this bill, which has been manipulated by the insurance industry and a cooperative committee chair, set back to its original form.

Call now or pay later, depending on what the conference committee decides.


Post a Comment

Requiring those Captcha codes at least temporarily, in the hopes that it quells the flood of comment spam I've been receiving.

<< Home


page is powered by Blogger. Isn't yours?

Newer›  ‹Older