State Insurance Commissioner J.P. Schmidt approved an average rate hike of 4.9 percent for most members of Kaiser Permanente Hawaii, the state's largest health maintenance organization.

Kaiser said the hike would affect 167,000 of its about 225,000 members. The affected people work for 6,000 companies subscribing to Kaiser healthcare programs.

The increase goes into effect Jan. 1.

Kaiser has requested the 4.9 percent increase in early October. Schmidt said the size of the increase will ensure that Kaiser brings in sufficient funds to produce a "slightly positive return on equity." Return on equity, or ROE, is a measure of profitability.

A projected ROE that is too high would indicate the proposed rate increase might be excessive, Schmidt said. Conversely, projections for a negative ROE would indicate the proposed rate hike was insufficient, he added.

The hike is Kaiser's largest in four years. This year Kaiser had a 2 percent increase. Previous premium hikes included a 3.75 percent increase in 2007, a 3 percent increase in 2006 and an 11 percent increase in 2005.

Additionally Schmidt said he approved a request by Hawaii Medical Service Association to raise rates by 18.2 percent for the 18,000 members who have individual plans.

"This is one of their larger increases, but in the past year or two (the plan) has shown a negative return on equity. This increase would allow a 3.8 percent return on equity, which is still relatively low."

He added that some people on the individual plan could qualify for lower rates under a new law that allows those who are self employed to buy health insurance under group plans.