Floridians may pay unreasonable health insurance rates under Obamacare because of a law passed by the Legislature and signed by Gov. Rick Scott, says U.S. Rep. Ted Deutch.
In a letter co-signed by Florida's nine other House Democrats, Deutch says the law takes away Florida's ability to "negotiate lower rates with companies or refuse rates that are too high."
The Aug. 1 letter goes on to ask the U.S. Health and Human Services Department to "protect Florida consumers — since Gov. Scott, the Florida Legislature and Insurance Commissioner (Kevin) McCarty will not."
Did the governor and Legislature prevent the commissioner from negotiating lower rates?
Legislators faced a unique challenge during their 60-day session this spring. Unlike many states that had laid groundwork to implement the Affordable Care Act since it became law in 2010, Florida repeatedly refused.
But with the law upheld by the Supreme Court and President Barack Obama back in office, the state was stuck. It had refused federal money to help with the transition. Now it was also running out of time.
A state Senate committee sought to do as little as possible to meet the law's requirements.
"We want to make sure that we're in compliance, that we're doing what we're required to do," Sen. David Simmons, R-Altamonte Springs, said at a March meeting.
The Affordable Care Act assumed that states would continue to take a lead role in setting insurance rates, just as Florida had done in the past. It encouraged states to strengthen their rate-setting authority, offering millions of dollars in grant money to help. But it didn't require that.
The Florida Office of Insurance Regulation faced a serious time-crunch to get up to speed on a host of new requirements under the law. Legislators offered a compromise. If the federal government wanted to impose new coverage requirements — well, it could set rates, too.
"Since the federal government is requiring these additional coverages that will cost more," said Sen. Joe Negron, Republican chair of the Affordable Care Act Committee, "then to me it makes sense for them to be responsible for approving rate increases that are certain to come."
Democrats on the committee agreed with this approach.
"I think we're going to find it's going to cost us a lot of money to set rates here in Florida," said Sen. Eleanor Sobel. "… I think we should rely on the federal government." She expressed confidence the federal government would have a "greater wealth of knowledge."
One hitch: The federal government didn't give itself rate-making authority.
What resulted was Senate Bill 1842, which among other things, suspended for two years the requirement that insurers get state approval for rates for new plans — such as those that will appear on new marketplaces. Companies would still have to file rate changes with the state. But they could act on those changes without approval.
Sobel now says that wasn't at all clear at the time.
The bill earned unanimous support from the Senate Appropriations Committee, then passed the Senate 28-8, mostly along party lines. Six senators voted after roll call, including Sobel, who changed her vote from yea to nay. "I was reading very quickly. Then I realized this was something that was not good for the people of the state of Florida," she said.
The 78-36 House vote also mostly followed party lines, with a few Democratic supporters.
When Gov. Scott signed the bill May 31, he wrote, "I support the Legislature's deference to the federal government. … Rates for the new plans will be reviewed by the same federal government that will be enforcing and updating new rules and regulations throughout this very fluid and uncertain transition period."
Here's the thing: The federal government, even under the Affordable Care Act, can't do what Insurance Commissioner McCarty can do.
Florida grants its insurance commissioner a range of powers. McCarty can negotiate lower rates with companies. He can refuse rates that the state determines to be too high.
The federal government can do neither of those things.
On July 31, the Florida Office of Insurance Regulation released projected premiums for policies that will be for sale on the new health insurance marketplaces launching in January 2014.
The state estimated rate increases in the individual market between 8 percent and 59 percent, estimates HHS disputes. It didn't mention McCarty has no power to negotiate or refuse because of the law.
And that matters. A Kaiser Family Foundation study in 2010 found that those states with robust authority to approve or disapprove rates were "able to extract significant reductions." The Palm Beach Post noted that Maryland used its negotiating power to push rates for next year's premiums down "by as much as a third" from what companies had proposed.
In the absence of oversight from Florida, the federal government does have some power to protect Florida consumers from outrageous rates — even if it can't rescind them or otherwise impose penalties.
Chief is the new requirement that insurers must spend at least 80 percent or 85 percent of premiums on medical care, or pay rebates. Second, it could refuse to let an insurer sell its product on Florida's federally run marketplace. Lastly, the federal government will review any increase greater than 10 percent to evaluate whether it's unreasonable — a designation the insurer will have to feature on its website.
Florida's U.S. House Democrats say the governor and legislators refused to allow the state insurance commissioner to "negotiate lower rates with companies or refuse rates that are too high." We rate the claim True.