November 15, 2012
99.6 percent of HMSA third-quarter dues cover member benefits and operating expenses
The Hawai‘i Medical Service Association (HMSA) paid $618.72 million in benefits
and administrative expenses in the third quarter of the year, equating to 99.6 percent
of member dues. HMSA ended the quarter with an operating gain of 0.4 percent of
In the third quarter, more than 91.5 percent of members’ dues were paid to physicians,
hospitals, pharmacies, and other health care providers. Administrative expenses
accounted for 8.1 percent of dues. On average, HMSA paid providers nearly $190 million
per month during the third quarter.
“Nearly 100 percent of the dues we collected from our members was spent on health
care costs and operating expenses,” said HMSA executive vice president and chief
financial officer Steve Van Ribbink, “but by carefully managing our investments,
we’re fortunate to be able to add to HMSA’s reserve this quarter.”
In addition to an operating gain, the HMSA reserve realized a net investment gain
of $6.04 million in the third quarter. The reserve protects HMSA members, employers,
and providers from underwriting losses and periodically funds special health initiatives.
At the end of the third quarter, HMSA had 707,690 members.
“This quarter’s gain will allow us to add about $12 per member to our reserve. It
may not seem like much, but in the last 12 months, we’ve been able to grow our reserve
by $103 per member. Think of it as an insurance policy for your health insurance.”
Year to date, HMSA collected nearly $1.85 billion in member dues and paid nearly
$1.83 billion in benefit costs and administrative expenses. In short, 99.2 percent
of member dues covered benefits and operating costs. HMSA ended the first nine months
of this year with an operating gain of 0.8 percent of revenue.
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.