HMSA's books in question

Wednesday, March 19, 2008 9:41 AM HST

Green wants insurer audited; Herkes blocks the lawmaker's efforts

by Nancy Cook Lauer
Stephens Honolulu Bureau

HONOLULU - While Big Island residents clamor for a fix to Hawaii's health-care crisis, two state lawmakers representing them remain at odds on how best to go about doing that.

Rep. Josh Green, D-North Kona, Keauhou, Kailua-Kona, chairman of the House Health committee and the only physician in the Legislature, wants stricter controls over the state's largest health insurer, Hawaii Medical Service Association. He's been refused requests for information and wants the state insurance commissioner to perform a full-scale audit on the company.

"This audit is our last chance this session to make any progress on reforming HMSA. All our other reform proposals this session have been killed by HMSA's lobbying machine," Green said. "HMSA must submit to full disclosure and a complete audit so that the people understand their role in the health-care crisis."

But Rep. Bob Herkes, D-Ka'u, South Kona, chairman of the House Consumer Protection and Commerce Committee, doesn't think HMSA should be singled out. Herkes has blocked Green's bills requiring HMSA to raise its reimbursements to doctors and hospitals, and he's now in the process of amending another of Green's bills to require a less intense audit of HMSA and all health insurance companies by the legislative auditor instead.

"If we want the picture, let's get the whole picture," Herkes said. "Adding the others shouldn't be a big deal because they're relatively small in comparison."

Herkes came under fire in 2006 because he had the HMSA Foundation executive administrator as an "embedded lobbyist" intern the year before when he let a bill die that would have allowed the insurance commissioner to continue regulating insurance rates.

But Herkes denies that he and HMSA have a special relationship, noting that he's received only $500 in campaign contributions and adding that the company has no more access to his office than anyone else.

"Anybody can walk in here," Herkes said of his Capitol office.

HMSA, meanwhile, has refused a request by Insurance Commissioner J.P. Schmidt for details of its government relations and advertising budgets, citing confidentiality and proprietary business information, and maintaining its not required to provide it by law. Senior Vice President Cliff Cisco told Stephens Media that the company is already audited plenty.

"We're a very regulated industry, so we're audited by a number of agencies every year, so another audit would just be another audit," Cisco said.

HMSA has been at the focus of Green and Schmidt's inquiries because it covers 60 percent of the insurance business in the state, has dodged $560 million in taxes over the past 10 years, and pays its executives millions in salaries and bonuses.

Schmidt said the information he was seeking on Green's behalf wasn't about lower-level salaries or anything confidential.

"There are statutes that allow me to request it to help me better address the insurance laws," Schmidt said. "I felt the request was reasonable to help me gain information to see how we can consider improvements in the laws regulating mutual benefit societies."

Nancy Cook Lauer can be reached at nclauer@stephensmedia.com.