State request to escape provision in new health care law delayed by feds
A state request to free Florida health insurance companies from spending at least 80 percent of premiums on medical costs has been delayed by the federal government. The U.S. Center for Consumer Information and Insurance Oversight extended its own deadline by 30 days.
Florida Insurance Commissioner Kevin McCarty appealed to the federal government in March, asking that the state be allowed to keep its current 65-70 percent standard. McCarthy wrote that the 80 percent requirement included in the new federal health insurance law would chase insurers out of the market and lead to fewer choices for consumers.
Insurers that fail to meet the new standard must pay rebates to consumers starting in 2012. If Florida companies did nothing to prepare for the new requirement, it could mean up to $62 million in rebates.
Consumer advocates contend the waiver is unnecessary. They say there is plenty of choice in Florida with at least 15 insurers selling individual products and no plans from the state's six largest insurers, including Blue Cross Blue Shield with 44 percent of the individual market, to leave the market because of the new requirement.
"The goal of this rule is to provide an incentive for insurance companies to operate more efficiently and to use customers' premium dollars wisely," Vivian Tapp of Hialeah-based Ambi-Lingual Associates wrote in an objection to the state’s request. "If insurers cannot meet this reasonable standard by improving their operations, then consumers shouldn’t have to waste money on low-quality, inefficient products."
Florida is one of 17 states that have requested a waiver from the requirement, known as a medical-loss ratio. So far, President Barack Obama’s administration has adjusted the requirement for eight states and denied one, from North Dakota.