Becker's Hospital Review

24 CFO / FINANCE Why high-deductible health plans are least prevalent in Hawaii By Jakob Emerson O n average, the percentage of U.S. private-sector employees enrolled in high-deductible health in- surance plans in 2020 was 53 percent. But Hawaii boasts the lowest percentage in the nation, with less than 18 percent of employees enrolled in HDHPs. HDHPs are defined as plans that meet the minimum deduct- ible amount required for health savings account eligibility — $1,400 for an individual and $2,800 for a family in 2020. Becker's asked the Hawaii Department of Commerce and Consumer Affairs Insurance Division why the state's HDHP enrollment is so low compared to all other states. For refer- ence, no state besides Hawaii has a percentage below 34 percent. The state with the highest percentage, North Car- olina, has 70 percent of private-sector employees enrolled in HDHPs. According to Arlene Ige, a health branch administrator with the state department, a law passed in 1974 may be part of the reason there is a low percentage of HDHPs in Hawaii. "Hawaii passed the Prepaid Health Care Act in 1974 that created an employer mandate for medical insurance cov- erage; and set a minimum standard for employee medical benefits," she said. "Hawaii's private employers are required to offer healthcare benefits meeting the prevalent plan stan- dard which are robust. In terms of robustness, PHCA com- pliant plans are generally at an actuarial value of a platinum (90/10) or gold (80/20) metal level." The 1974 state law can also block employer efforts to imple- ment cost-reduction changes that include HDHPs. Beyond requiring private employers to provide health cov- erage for all eligible employees, the PHCA caps employee contributions and requires minimum benefit levels. The state must approve all plans before employers can offer the coverage to employees or implement any plan changes, in- cluding deductibles and out-of-pocket maximums, accord- ing to asset management firm Mercer. Federal law requires high-deductible health plans to have deductibles and out-of-pocket maximums that are larger than Hawaii's benchmark plan — the HMSA Preferred Pro- vider Plan 2010. The Hawaii plan imposes a $100 individ- ual deductible for out-of-network provider care, none for in-network care, a $12 office visit copayment and a maxi- mum $2,500 annual copayment for individual coverage. Because of Hawaii's lower cost-sharing requirements, em- ployers looking to offer HDHPs to employees may find the option challenging or even impossible. In 2017, Hawaii lawmakers approved legislation that would allow employers to offer employees an HDHP when paired with a health savings account. Before then, high-deductible plans weren't allowed in Hawaii's insurance market, accord- ing to the Honolulu Star-Advertiser. As of 2019, payers are allowed to offer high-deductible health plans to Hawaii employers if the plan is sold with a prepaid group accident and health or sickness policy that is not an HDHP. No package can consist of an HDHP offered in conjunction with a health savings account unless the pack- age is approved as a prepaid group healthcare plan. Payers also must file a report with the state that contains their educa- tional information and marketing materials about any health plan and health savings account they offer. n Oscar Health to exit 2 states By Jakob Emerson O scar Health saw major growth in enrollment and revenue in the first quarter, but reported a net loss topping $77 million and plans to exit the Arkansas and Colorado insurance markets aer this year, according to the company's earnings report published May 10. During its earnings call with investors, the New York City-based insurtech company said its biggest insurance priority this year is profitability in 2023. "Oscar maintained strong momentum through the first quarter, reflecting our ongoing ability to leverage our technology to drive top line growth for the business and improve efficiencies as we scale," CEO and co-founder Mario Schlosser said. "As we continue to execute against our three strategic priorities for the year — position the company for near-term profitability, continue to grow in the U.S. insurance market and accelerate our +Oscar product offering — we are well-positioned to meet the needs of our members, clients and pro- vider partners." Four things to know: • Total revenue in the first quarter was $972.8 million, rising from $369.4 million in 2021, or a 163 percent increase. • Total operating expenses in 2022 were $1.04 billion, increasing from $433 million year over year. • Net losses for the company were over $77 million in 2022, decreasing from nearly $89 million in the first quarter of 2021. • Membership nearly doubled between the fourth quarter of 2021 and the first quar- ter of 2022, growing from 542,220 in 2021 to 1,073,595 million in 2022. Membership growth was driven largely by the expansion of the company's dual network strategy and small employer plans. n

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