The state's two largest healthcare plans swung from profits to losses in the second quarter as they were stung by higher costs.

The Hawaii Medical Service Association reported a net loss of $4.34 million for the three months ended June 30, saying that its benefit expenses and administrative costs had grown faster than dues revenue. It was the third time over the past four quarters that HMSA, the state's largest insurer, reported a loss.

A year earlier, HMSA had reported a profit of $12.6 million.

Healthcare insurers have been battling rising costs as baby boomers age and make greater use of medical services, as well as increased expenses for drugs and new technology. HMSA said 94.8 percent of its dues revenue was eaten up by benefit expenses. That was up from 92.6 percent a year earlier.

"Healthcare costs are continuing to rise in 2007, and are outpacing HMSA dues revenue," Steve Van Ribbink, HMSA's chief financial officer, said in a statement.

The insurer said its loss would have been bigger if not for an increase in its investment income. Last month HMSA hiked preferred provider plan premiums for the state's small businesses and their workers by an average of 6.6 percent, its largest increase in three years.

Kaiser Permanente Hawaii, the state's largest health maintenance organization, has not yet filed its rates for next year. Kaiser usually files for rate increases in the late summer or early fall, but said it is waiting until the state's Insurance Division issues new rules derived from a recently passed rate regulation law.

Kaiser spokeswoman Lynn Kenton declined to comment on whether the insurer will seek a rate hike. She said the company's goal is to review costs and pass on as minimal a rate increase as possible if one is needed. Kaiser's last increase was in January, when rates went up an average 3.75 percent.

Kaiser Permanente Hawaii reported a second quarter loss of $3.2 million, in part because of higher medical expenses. A year earlier it had a net profit of $1.5 million.

It said a change in estimates for accounts receivable and claims reserves also contributed to the loss. The insurer also said it had lower-than-expected membership as counts fell to 219,000, from 225,000 a year earlier.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.