The Obama administration made the right call last week by denying Florida's waiver request that would have let the state's health insurers charge more for less care. Florida Insurance Commissioner Kevin McCarty's case for exempting Florida from a requirement that health insurers spend at least 80 percent of premium dollars on medical care was weak and disingenuous. He appeared more interested in protecting the profits of insurers and reflecting Gov. Rick Scott's antipathy toward health care reform than looking out for Florida health insurance consumers. The administration's denial was well deserved.
One feature of the Affordable Care Act that went into effect this year adopts a "medical loss ratio" standard requiring heath insurers in the individual market to spend 80 percent of each premium dollar on reimbursements for medical services or health care quality improvement rather than on high overhead and administration. (Large employer plans must meet an 85 percent medical loss ratio.) Insurers that don't meet that standard must issue rebates to their customers.
But McCarty formally objected to the standard, asking the administration for a medical loss ratio adjustment to 68 percent, 72 percent and 76 percent for the years 2011, 2012 and 2013 respectively. He claimed that without this waiver Florida's individual health insurance market would be destabilized, pointing to four insurers who threatened to leave the state. But as the 16-page denial from the U.S. Department of Health and Human Services notes, the four companies combined had fewer than 300 policyholders. Moreover, the administration found in a detailed analysis that most health insurers in Florida's individual market already meet the 80 percent standard, are sufficiently profitable to provide rebates if needed, or are already adapting to give consumers better value for their premium dollar.
In a win for Florida consumers, the administration found there was no need to delay implementation of the rule. McCarty's attempt to bypass consumer protections either to help health insurance executives or to appease Scott appropriately failed.