Hawaii Health Insurance heats up

The battle over the healthcare insurance market in Hawaii may reach new heights in a few months.



HMSA and newcomer Summerlin will look to sign up thousands of businesses that are up for renewal this July.



It will be Summerlin's first test in its efforts to become a true player in the islands.



As the two companies square off, we talked to both sides.



As a result of the state prepaid healthcare act, which was enacted during the 1970s, every employee in Hawaii has healthcare insurance.



Through sheer longevity, HMSA has dominated the market, with more than 700,000 members.



For new insurers, Hawaii has been a closed box.



"Because you've had the prepaid act for so many years, everyone has coverage, it's mandated. So from that perspective, there's no pie left," said Jim Dyer, chairman of Summerlin.



Summerlin says it has been doing business in Hawaii for nearly four years and is now prepared to go head-to-head with HMSA.



As a for-profit organization, it will pay the state's 4 percent general excise tax. Nonprofit HMSA does not.



Even so, Summerlin has requested to cut its rates by an average of 20 percent.



"How can the new kid on the block, who has to pay the 4%, be able to reduce their rates by 20% and the others do not? And I would suggest that part of the reason is our monopoly situation," said Sen. Sam Slom, Hawaii Kai.



The state insurance commissioner must decide whether Summerlin can afford the rate cut before he approves it.



If it goes through, it will be an attractive lure this July, when 11,000 small businesses will be up for renewal.



"We are going to be very successful in July and that means that we expect to write hundreds of employer groups with an effective date," Dyer said.



"We will be competitive in the marketplace," said HMSA spokesman Cliff Cisco. "As to how much the new competition will take in the open enrollment periods, we really don't know, and it's not appropriate we speculate."



HMSA says the 11,000 small business groups which are up for renewal represent more than 100,000 people.



HMSA also says it welcomes any new competition as long as it works within the rules as mandated by law.