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Health insurance companies blame losses on reform fees

HONOLULU — Hawaii’s two largest health insurers reported $36 million in quarterly losses Friday and blamed the downturn on fees required by the federal Affordable Care Act.

Those fees may lead to higher premiums for customers, the companies said.

The Hawaii Medical Services Association posted losses of $30.1 million in the first quarter and recorded $46.1 million in fees related to President Barack Obama’s federal health care overhaul. Kaiser Permanente reported losing $5.8 million and said it paid $8 million in fees.

Both nonprofit entities reported their quarterly earnings to Hawaii’s insurance commissioner.

The nonprofits are privately held, so their earnings reports are less extensive than what public companies are required to file. But they must provide the information to the commissioner who reviews proposed rate increases.

“The ACA fees will have an impact on our premiums,” said Robyn Kuraoka, spokeswoman for Hawaii Medical Services Association.

The entity has proposed increasing premiums by 13 percent on average beginning July 1. Because that’s an average across customer groups, some customers could see even higher increases, Kuraoka said.

The proposed hikes have not yet been approved by Insurance Commissioner Gordon Ito, Kuraoka said.

Kaiser Spokeswoman Laura Lott said it’s too early to say whether the losses will result in higher premiums for customers, but like any organization, Kaiser has to cover its costs. “We’re a nonprofit, but we still have to cover the costs and have money for improving our facilities, buying new equipment and upgrading hospitals,” Lott said.

The fees result in increased access to health care because they pay for subsidies to help people buy health insurance that could not otherwise afford it, Lott said.

Overall, Kaiser brought in $296.1 million in operating revenue in the first quarter of 2014, an increase compared to $286.3 million for the same time period last year.

But in the first quarter of 2013, Kaiser reported a loss of just $600,000. Kaiser had 229,690 members at the end of March, an increase of nearly 6,000 members in the past year.

Hawaii Medical Services Association collected $707.9 million in premiums, also known as operating revenue, for the first quarter of 2014, up from $636.6 million in premiums during the same quarter in 2013.

The nonprofit posted a loss of $3.6 million in the first quarter of 2013, which was attributed at the time to rising health care costs. It reported a total of 732,526 members in early May.


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