Hawaii lacks rivals for health insurance

Hawaii is the fifth-least competitive commercial health insurance market in the nation, according to a study released Tuesday by the American Medical Association.

That not only means fewer health plan choices for consumers and employers, but a potentially dangerous situation in which a single or a couple of health insurers can dictate policies, procedures and premiums that affect patient care, AMA said.

"Patients have not benefited from the virtual unlimited power insurers have over health care," said AMA President Peter Carmel in a statement. "Health insurers have posted historically high profits, even during times of economic slowdown. The premiums they charge have soared without an expansion of patient benefits."

Average insurance premiums for family coverage nationwide has more than doubled from 1999 to 2009, the organization said.

Hawaii Medical Service Association and Kaiser Permanente Hawaii — the state’s two largest health insurers — together control 89 percent of the private health insurance market, according to the study based on 2009 fully insured and self-insured commercial enrollments in health maintenance organizations and preferred-provider organizations. Hawaii Medical Assurance Association and University Health Alliance share the remaining portion of the market.

"You can talk about lack of competition, but when you look at how that has manifested here in Hawaii, you don’t see those dire consequences that are alluded to in the AMA study," said Elisa Yadao, HMSA spokeswoman. "We have one of the lowest rates of uninsured in the country and are one of the healthiest states in the country."

In addition, Hawaii’s population is generally smaller than other metropolitan areas, and with fewer members, one would expect fewer competitors, she said.

Kaiser representatives weren’t available for comment.

Oregon topped the list of most competitive states for health insurance, with seven major commercial insurers which enroll more than 90 percent of the market.

The two largest health insurers in Oregon control 39 percent of the health insurance market, while the two biggest health plans in Alabama — the least competitive commercial health insurance market — have 95 percent market share, the study showed.

Other highlights of the national study include:

» An absence of health plan competition in 83 percent of metropolitan markets studied.

» In about half the metropolitan markets, at least one health insurer held 50 percent or more of the market share.

» In 24 of the 48 states studied, 70 percent or more of the market was controlled by the two largest health plans.

Although competition is limited, Hawaii health care premiums are generally lower and plans are richer in benefits than those on the mainland, said Gordon Ito, state Insurance Commissioner, who regulates health plans.

"One of the reasons there is a lack of competition is, in part, due to our tendency to stay with what we are comfortable with," he said.

Federal health care reform, which establishes in 2014 a health care exchange — a one-stop shop where individuals and small businesses can compare plans and pricing — will encourage additional insurers to enter the market, according to Ito.

The study, "Competition in Health Insurance: A Comprehensive Study of U.S. Markets," examined 2009 enrollment in health maintenance organizations and preferred-provider organizations from 368 metropolitan areas and 48 states.