News Release
May 16, 2008
HMSA health care costs exceed dues revenue in 1Q
Laura Lott
(808) 952-7566
laura_lott@hmsa.com
The Hawaii Medical Service Association (HMSA) today announced it fell short of breakeven
by 2.7 percent of dues revenue in the first quarter of the year. The nonprofit health
plan reported a net loss after taxes of $10 million, compared to a net loss of $687,382
in the first quarter of 2007.
HMSA Dues Revenue, Benefits and Expenses
First-quarter dues revenue was $366.09 million, and benefit expenses were $341.39
million. For the same period last year, revenue was $452.96 million, and benefit
expenses were $418.68 million. Administrative expenses for the health plan declined
$213,344 in the first quarter of 2008 to $40.98 million.
On average, HMSA paid physicians, hospitals, pharmacies, and other health care providers
$113.80 million per month during the first quarter of 2008. Member benefit expenses
accounted for 93.2 percent of first-quarter dues revenue.
“First-quarter operating results indicate that higher hospital and physician
fees in 2008 are having a significant effect on the health plan’s finances,”
said Steve Van Ribbink, HMSA executive vice president and chief financial officer.
“Increases in provider fee schedules also mean higher member dues rates over
time. As costs grew faster than member dues, HMSA experienced its seventh straight
quarter of operating losses.”
“The net underwriting loss in the first quarter was $16.28 million, but investment
income of $5.89 million reduced the loss to a little more than $10 million,”
said Van Ribbink. “Without investment income from the health plan reserve,
HMSA would have suffered a much larger loss. Instead, investment income helped reduce
the loss by 36 percent.”
HMSA Health Plan Reserve
The HMSA reserve is maintained to fund special initiatives and protect members,
employers and providers from losses and emergencies. Investment income from the
reserve is also used to help subsidize health plan dues rates.
“Our health plan reserve has been accumulated entirely from investment activities
over HMSA’s 70-year history,” said Van Ribbink. “It provides great
value to our members year after year, and is the result of prudent financial practices
over many decades.”
In its 70 years of operations, HMSA has paid 93 cents of every dues dollar to health
care providers for delivering benefits to members. Few health plans in the country
can meet or exceed the value that HMSA offers its members.
About HMSA
HMSA is a nonprofit, mutual benefit association founded in Hawaii in 1938. It is
governed by a community board of directors that includes representatives from health
care, business, labor, government, education, clergy, and the community at large.
HMSA is an independent licensee of the Blue Cross and Blue Shield Association. Nationally,
HMSA and 38 other Blue Cross and Blue Shield plans provide worldwide coverage to
more than 100 million members.
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