May 15, 2012
HMSA finished Q1 with an operating gain of 1.2 percent
Moani Wright-Van Alst
The Hawai‘i Medical Service Association (HMSA) announced today that it earned
an operating gain for the first quarter of $7.2 million. This is 1.2 percent of
the $614.5 million in dues the health plan earned. After adding investment and other
income and deducting taxes, HMSA’s total gain for quarter was $12.8 million,
or 2.1 percent of dues collected.
This gain went into HMSA’s reserve, which covers large unexpected health care
costs by members or occasional losses by HMSA. The company’s reserve stands
at $422.1 million or $602 per member.
“Our operating gain is in line with our projections,” said Chief Financial
Officer Steve Van Ribbink. “As a nonprofit, our goal is to collect enough
dues to cover our members’ health care costs and our administrative expenses,
which is known as break even. We came within 1.2 percent of breaking even in the
first quarter and I am pleased that we continue to provide excellent value to our
The health plan paid $554.9 million or 90.3 percent of dues directly to doctors,
hospitals, pharmacies and other health care professionals in the quarter. Administrative
costs were $52.3 million, representing 8.5 percent of dues.
HMSA ended the quarter with 701,431 members. Of this membership, 693,897 are covered
by medical plans insured by HMSA. This represents an increase of 111,985 members,
or 19.2 percent, over the 581,912 members insured by HMSA at March 31, 2011. The
increase stems largely from the conversion of the Hawaii Employer-Union Health Benefit
Trust Fund’s membership from self-funded medical plans to HMSA insured plans
on January 1, 2012.
The health plan also experienced increases in dues revenue and expenses for the
first quarter of 2012 compared to the first quarter of last year principally from
the large membership increase in HMSA’s insured medical plans.
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. HMSA is
an independent licensee of the Blue Cross and Blue Shield Association.