Employees of private Hawai'i businesses and government agencies with Kaiser Permanente health insurance will see premiums go up 3 percent next year — Kaiser's smallest increase since 2000 — if the state approves a recent rate change request.

The health maintenance organization and second-largest health insurer in Hawai'i asked state insurance regulators last month for approval to raise rates because of rising healthcare costs and planned capital improvement projects.

"We have seen a slowing of the rise in healthcare costs," state Insurance Commissioner J.P. Schmidt said. "Healthcare costs have been rising far above the cost of living or inflation rate over the past several years. They are still rising, but not as much as before. The 3 percent (rate increase request) I think reflects that trend."

The increase would take effect next year as employers negotiate new contracts with Kaiser.

The higher rate would apply to about 174,000 of Kaiser's 227,000 members, including state, federal and private workers. Individual plans and those under Medicaid, Medicare and Quest would not be affected.

Kaiser said it's not possible to calculate a representative sample of what a 3 percent increase would mean for a typical member, because rates and coverage vary by employer.

Based on last year's rate filing, the average monthly premium for a base Kaiser plan was $240, according to the state. A 3 percent increase on that figure translates to $7 a month.

Kaiser increased rates 11 percent this year for about 210,000 members statewide, including individual health plans.

In 2004, Kaiser raised rates 11.7 percent after a request to raise rates 14.5 percent was rejected by the state, which began regulating health insurance premiums in 2003. Kaiser's 14.5 percent requested increase would have been its biggest hike since 1989. The proposed 3 percent increase for next year matches Kaiser's increase in 2000.

The Hawaii Medical Services Association, the state's largest health insurer, earlier this year was approved for a 4.9 percent rate increase that took effect July 1.

Summerlin Life and Health Insurance Co., a new competitor in the Hawai'i market this year, was granted an 18 percent reduction in its rate plan this year.

Reach Andrew Gomes at agomes@honoluluadvertiser.com.