The Hawaii Medical Service Association has proposed a 3.8 percent increase in health insurance premiums for its preferred provider plan that would take effect on July 1 and affect about 84,000 small business members in the Islands.

The Honolulu Star-Advertiser reports the rate increase, which was filed last week with the state’s Insurance Division, is the lowest since 1997, when HMSA sought to raise rates by 3.4 percent. The newspaper notes that the Insurance Division last year reduced HMSA’s requested increase from 4.2 percent to 3.7 percent.

The Hawaii Medical Service Association reported a profit of $43.8 million for 2011, which included an operating gain of $22.3 million on revenues of $2.1 billion.

Hawaii’s largest health insurer realized the $43.8 million gain after adding investment income and other income and deducting taxes. HMSA reported net income of $5.27 million for 2010.

“To put our total gain in perspective, $43.8 million covers about nine days of health care claims paid to doctors, hospitals, and health care professionals for our members,” HMSA Executive Vice President and Chief Financial Officer Steve Van Ribbink said in a statement.

HMSA reported net income of $16.68 million for the fourth quarter of 2011, compared to $14.27 million for the same quarter in 2010.

HMSA, the Blue Cross Blue Shield provider in Hawaii, had 692,011 members as of the end of 2011, the company said.