As health insurance premiums rise nationwide, we need to protect ourselves from falling victim to skyrocketing and unfair rates.

In 2002, the Hawai'i Legislature passed an excellent law that gave our insurance commissioner the job of regulating the rates we pay for health insurance to ensure that they will "not be excessive, inadequate, or unfairly discriminatory and shall be reasonable in relation to benefits provided." Unfortunately, that law sunsets on June 30 unless we take action.

Virtually all states regulate health insurance rates. The only situation in which regulation might not be needed is where there is lively and active competition among many health insurers and no insurer holds a large share of the market for the kind of health insurance it peddles.

In Hawai'i, however, HMSA holds 65 percent of the health insurance market, and Kaiser holds 22 percent. Each of them holds a far higher percentage of the kind of insurance it specializes in, and there are evidently only three other (non-Quest) health insurers.

Furthermore, HMSA, which already has the advantage of being exempt from state or local taxes, holds a huge dollar reserve (over half a billion dollars, according to the last annual report), which makes it possible, in the absence of effective rate regulation, to lower its rates below cost to kill the competition or to juggle its rates to benefit its favorite companies.

According to J.P. Schmidt, our insurance commissioner, since the rate regulation statute passed, he has required health insurers to reduce their rates, saving Hawai'i citizens about $18 million. Actually, much more may have been saved because health insurers voluntarily reduce their rates so they won't be deemed excessive by the commissioner. Thus the rate regulation law has an important deterrent effect.

Our Prepaid Health Care Act requires that Hawai'i employers purchase health insurance for most employees who work 20 hours or more each week. In return, the state has an obligation to ensure that the rates the employers must pay are fair, reasonable and nondiscriminatory. Rate regulation enables the state to fulfill that obligation.

Rate regulation also encourages new insurers to enter a market, like Hawai'i's, where there are few competitors and they largely control the market. The representative of Summerlin Life and Health Insurance Co., a lonely recent entrant into Hawai'i, testified that the existence of state rate regulation was a condition to its entry here. It's not difficult to understand why, at a recent hearing, HMSA, Kaiser and Health Plan Hawai'i, an HMSA affiliate, testified to let the rate regulation law expire.

As health insurance rates continue to rise in response to rising medical costs, it becomes increasingly important to ensure that our rates are fair, nondiscriminatory and reasonable. Only insurance experts, such as actuaries, are capable of judging health insurance rates. Our health insurers just cannot be relied upon to self-regulate the rates they charge in a fair manner without discrimination.

As the insurance commissioner has stated: "Our three-year experience with rate oversight has shown us that the health plans use some subjective judgments in making rates. We have detected everything from simple errors, to unsupported rate factors, to intentional deviations from established methodologies. Rate oversight helps to correct these types of problems."

It is therefore essential that the Legislature continue to allow the insurance commissioner to regulate health insurance rates. House Bill 2879 and Senate Bill 2917 do just that. Please call your House and Senate representatives and urge them to support these bills. Health insurance is expensive now; protect yourself against skyrocketing and unfair rates in the future.

Richard S. Miller, a Honolulu resident, is an emeritus law professor. He wrote this commentary for The Advertiser.