State requires health insurers to detail costs added by Affordable Care Act

Published July 26, 2013

TALLAHASSEE —The next front in the national battle over health care reform: your mailbox.

A little noticed law passed by state legislators this year deregulates any new health insurance policies for the next two years and requires insurers to send customers a disclosure form spelling out how much of the cost of the policy is attributable to the Affordable Care Act.

Proponents say it is a necessary component of enacting the federal health care reform and will shift regulation of new health care policies to the federal government, including policies emerging from the federal health care exchange.

But opponents say the federal government doesn't have the resources nor the ability to regulate insurance rates in Florida and, without those protections, rates could soar. If rates rise, they said, the disclosure form will mislead the public into concluding that the increased costs are all associated with the health care reform while any reductions in costs won't be recorded.

"The sole purpose for the form is to present unfair 'apples and oranges' comparisons to the public that will ensure sticker shock," said Greg Mellowe, policy director of the health insurance advocacy group, Florida CHAIN.

In a letter urging Gov. Rick Scott to veto the proposal, U.S. Sen. Bill Nelson, the state's former insurance commissioner, called the attempt at deregulating the health insurers "unbelieveable and unconscionable" and could result in rate increases of between 10 percent and 70 percent.

But the governor and other advocates of the new law disagree.

"Rates for new plans will be reviewed by the same federal government that will be enforcing and updating the new rules and regulations throughout this very fluid and uncertain transition period,'' the governor wrote when he signed SB 1862 into law on May 31.

He noted that the law does not apply to health plans in effect before the Affordable Care Act took effect in March 2010 and state regulators will continue to review the rates of those health plans.

"No one should be afraid of the truth,'' said Sen. David Simmons, R-Maitland, sponsor of the bill. "You can't make intelligent decisions unless you have accurate facts."

The measure, passed by lawmakers in the final days of the legislative session, repeals state rate review of health insurance plans in effect after March 2010, and requires insurers to spell out the costs of the Affordable Care Act for the next two years, beginning January 2014.

Senate Democrats tried to amend the bill to require that the cost comparison required in the disclosure form be reviewed by accountants to verify that the changes in premiums are attributable to the Affordable Care Act.

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"If the state is going to be pulling back on regulating pricing due to the implementation of the Affordable Care Act, we need to make sure that these increases aren't willy nilly but verifiable,'' said Sen. Darren Soto, D-Orlando, who sponsored the amendment.

But the suggestion was rejected when Simmons said it "would mess up the ability of us to get this approved by the House."

House Democrats also noted that the law not only removes state oversight but blocks the state from enforcing the protections of the federal reforms. The Senate voted for the bill 25-6 and the House approved it 78-36.

The consumer notices must follow a form approved by the governor and Cabinet at their Aug. 6 meeting. But there is no provision in the law for checking the accuracy of the facts, except Simmons said, existing laws requiring insurers to be accurate.

A draft of the proposed form prepared by the Office of Insurance Regulation includes a detailed grid showing what the health insurance policy would cost before the federal health care reform takes effect, and what it costs after the changes kick it. It also requires insurers to spell out how much of the cost of the policy can be attributed to key features of the law — covering people with pre-existing conditions, offering new benefits, paying taxes and fees, charging the same premium for men as women.

"The notices obscure from consumers the many advantages of the Affordable Care Act, including the fact that it is ensuring that affordable health coverage is accessible to all Americans,'' said Mark Hollis, spokesman for House Democrats.

CHAIN's Mellowe commended the proposed disclosure notice drafted by the Office of Insurance Regulation, saying it will "reduce the likelihood that consumers will be misled into believing that this notice actually explains the impact of the Affordable Care Act on their premiums." But, he said, "that doesn't change the misleading nature of the numbers that will be reported on the form."

A hearing on the draft form was supposed to be held on it this week in Tallahassee, but no one showed up, so it was cancelled, Office of Insurance Regulation officials said.

Mary Ellen Klas can be reached at and Twitter @MaryEllenKlas