Hawaii’s Largest Health Insurer Revises Medicare Advantage Plans for 2027

Due to financial pressures, Hawaii’s largest health insurer is making significant changes to its Medicare Advantage offerings for 2027. The Hawaii Medical Service Association (HMSA) will be discontinuing two of its premium Medicare Advantage Plans, which means around 16,000 members will need to find new coverage by December 31 or switch to other HMSA plans that come with higher costs.

HMSA, affiliated with Blue Cross Blue Shield, began notifying impacted members by certified letters on Thursday. The plans being discontinued are the Akamai Advantage Complete Plus and Standard Plus, both of which are designated as preferred provider organization (PPO) plans.

Members who do not enroll in a new plan will default to the federal government’s original Medicare plan starting January 1, which unfortunately does not cover prescription drugs.

“This decision was not made lightly,” said HMSA CEO Mark Mugiishi. “It’s certainly been difficult.”

The changes are, according to him, a response to increasing healthcare costs and broader industry challenges. Notably, several large national insurers have been reducing their Medicare Advantage options or exiting certain markets. While HMSA is not leaving the market, it has needed to adjust its plans for sustainability.

The reaction from some Hawaii members has been one of shock and confusion. For example, 72-year-old Hilo resident Marla Malinski felt completely taken aback upon receiving her letter. Recently diagnosed with lung cancer, she found the news particularly distressing and was left in tears upon learning her coverage would end.

“I read it several times, hoping I missed something,” Malinski shared, as she grapples with her options and anticipates additional out-of-pocket costs for essential treatments.

This month, she pays almost $400 from her Social Security check for her Medicare Advantage coverage, feeling that she’s been contributing towards this benefit since she was a teenager. “This is not a handout,” she insisted in an email. After switching to HMSA a few years back, she and her husband have noticed a pattern of escalating costs with diminishing benefits.

Currently, about 316,000 residents in Hawaii are part of the Medicare program, primarily covering individuals aged 65 and older, as well as some younger individuals with disabilities. The Centers for Medicare & Medicaid Services (CMS) offers a fee-for-service model known as “original Medicare,” which requires additional private coverage for prescription drugs. CMS also partners with commercial insurers to deliver Medicare Advantage plans, often incorporating additional benefits like vision and dental care that original Medicare does not cover.

Starting next year, HMSA will end its higher-option plans but will reintroduce them under the same names in 2027, albeit at significantly higher premiums. The monthly premiums for the Akamai Advantage Complete Plus and Standard Plus plans will jump to $240, from around $150 to $160. However, HMSA will also introduce a lower-cost health maintenance organization (HMO) plan in 2027, available only on Oahu, priced at $45 monthly, and including some additional benefits.

Concerns about rising healthcare expenses are prevalent among Hawaii’s elderly residents, according to AARP Hawaii’s State Director Keali‘i Lopez. She noted that medical visits and drug costs are a major worry, especially for those on fixed incomes, where even small changes can have a significant impact.

Mugiishi pointed out that healthcare costs are simply higher today. Hospital admissions, pharmaceuticals, and advanced therapies are all more expensive. Many patients, especially in light of the COVID-19 pandemic, now have more complex health needs and chronic conditions which further drives up usage.

Compounding these issues, federal funding for Medicare Advantage has been declining amid rising costs. Additionally, HMSA’s performance rating in a federal incentive program dropped to 3.5 stars recently, resulting in the loss of substantial bonuses.

“We couldn’t keep the plans at the current price and benefits,” Mugiishi remarked, also noting that other major insurers had pulled out of the Medicare Advantage market in various states.

Moving forward, HMSA plans to step up its communication with affected members, providing more information and options. They will issue follow-up materials containing enrollment forms, and members are encouraged to reach out via phone or visit HMSA centers for assistance.

Lopez highlighted that navigating Medicare coverage is often confusing. It’s essential for seniors and their caregivers to compare their options based on individual health needs. While some might opt for higher-cost plans to minimize out-of-pocket expenses, others in better health could benefit from lower premium plans.

AARP is set to co-host workshops throughout Hawaii to assist seniors in making informed decisions regarding Medicare. On a wider scale, major health insurers across the country have been trimming their Medicare Advantage offerings, thereby resulting in fewer choices for seniors.

Despite these challenges, Medicare Advantage programs are expected to stabilize in 2027, with predictions of similar average premium costs as before. HMSA has also begun significant policy adjustments for its healthcare providers as part of an ongoing effort to integrate and enhance services.