TALLAHASSEE — The federal government on Thursday denied Florida's request for relief from a provision of the federal health care law that requires insurers spend at least 80 cents of every premium dollar on direct patient care.
Consumer groups say it all boils down to this: Large numbers of insured Floridians stand to get some of their premium payments back.
The exact amount is unclear, in part because the government has yet to collect insurance premium data for 2011. Using 2010 data, insurers would have been required to pay out about $60 million in rebates over the next three years.
Also unclear is who might qualify for the rebates. Money potentially could be headed to individual customers of two of the three largest insurance providers in the state: United Healthcare and Humana.
Customers of the state's biggest provider, Blue Cross Blue Shield, are unlikely to receive rebates.
The state said it asked for relief from the requirement to keep health insurance firms from leaving Florida, but the federal government rejected that argument, saying Florida has one of the most competitive health insurance markets in the country.
"We think that this is a very good decision for the insurance consumers in the state of Florida," said Steve Larsen, the federal official who signed the denial letter. "It's going to ensure that they continue to get value for their premium dollars."
The ruling by the U.S. Department of Health and Human Services means that all health insurers in Florida must meet or exceed the 80 percent standard, known as a medical loss ratio or the 80-20 rule, or provide rebates to policyholders.
The medical loss ratio provision is part of the Affordable Care Act, derided by critics such as Gov. Rick Scott as Obamacare.
The law allows states to seek up to three years of relief from the 80-20 rule. Florida Insurance Commissioner Kevin McCarty sought a waiver to adjust the medical loss ratio to 68, 72 and 76 percent for 2011, 2012 and 2013, delaying full compliance until 2014.
McCarty's waiver request said four insurers threatened to exit the state if the 80 percent standard were imposed, but the federal review found that the four companies combined had fewer than 300 policyholders.
In its 16-page decision, the government said health insurers in Florida already meet the 80 percent standard, are profitable enough to pay rebates if they fall short of the standard, or are adapting their pricing to comply with the law.
"It's a victory for consumers. I hope there will be rebates," Senate Democratic Leader Nan Rich of Weston said of the decision. "But if the larger insurers are already meeting the 80 percent standard, then people should not be too concerned."
More than 842,000 Floridians were covered by the individual health insurance market in 2010, according to state data. The state's current medical loss ratio is 65 percent.
The government says some insurers will be required to offer rebates, but that's based on the firms' data for 2010, which may have changed. Rebates would shrink as insurers lower premiums to comply with the 80 percent standard.
"We won't actually get the 2011 data until next spring," Larsen said. "So we won't know exactly what level of rebates there will be."
The Florida case was watched by advocacy groups across the country. Health Care for America Now, a nationwide grass roots organization that supports President Barack Obama's Affordable Care Act, said the decision "sent a clear message to health insurance companies that their days of ripping off consumers are over."
"Our health insurance dollars should be going towards actual care, not excessive industry profits and inefficient business practices," said Brad Ashwell of the Florida Public Interest Research Group.
FPIRG was one of a number of consumer groups that opposed the waiver request. In addition, more than 3,000 Florida consumers signed a petition opposing it.
Florida is the largest state so far to have its waiver request decided. About a dozen other requests are still pending.
Blue Cross Blue Shield, the state's largest health insurer, is already pricing its products to the 80 percent rule "and consequently does not expect to owe rebates for 2011," the feds' denial letter said.
In a statement, the Jacksonville-based health giant said: "Blue Cross Blue Shield of Florida supports a vibrant and dynamic insurance market place in Florida. We remain fully committed to providing quality and affordable health care and will continue to comply with all regulatory guidelines established by the federal government."
Blue Cross controls about 44 percent of the Florida health care market, according to the federal government.
The next two largest health insurers in the state, Golden Rule, part of United Healthcare Group, and Humana, could be required to offer rebates, HHS said. Both firms did not respond to requests for comment.
McCarty, the director of the state Office of Insurance Regulation, which reports to Scott and the Cabinet, voiced disappointment in the decision.
His office said evidence from two hearings in 2010 showed the change will "destabilize" the individual health insurance market in Florida.
But the federal government called those hearings one-sided, saying industry officials were allowed to testify but not consumer representatives.
Steve Bousquet can be reached at firstname.lastname@example.org or (850) 224-7263.