Florida Seeks Waiver to Avoid Losing Health Insurers

Controversial portion of health care law to take effect in 2011
By: Gray Rohrer | Posted: September 25, 2010 4:05 AM

Florida will become the third state to seek a waiver of the controversial medical-loss ratio provision of the Affordable Care Act, the remnants of President Barack Obama's health-care reform law signed in March.

After receiving the unanimous approval of the Florida Health Insurance Advisory Board (FHIAB), Insurance Commissioner Kevin McCarty announced he will send the waiver request of the medical-loss ratio, or MLR, sometime after Oct. 8. The request must be approved by Health and Human Services Secretary Kathleen Sebelius, whose department has already received requests from Iowa and Maine, before the provision is scheduled to take effect in January, 2011.

The MLR is a portion of the federal health care law which states that health care providers must spend 80 percent of their expenditures on actual medical procedures. It will mainly affect smaller insurers and individual policyholders, because larger insurers and those with larger group policies already meet the 80 percent threshold.

McCarty attended a meeting with other state insurance commissioners and White House officials, including Sebelius, earlier this week, in which federal officials asked for specific reasons and statistics, instead of a vague dislike of the provision by insurers, in order to grant a waiver.

“We did have a company say that without a moderation in the MLR, they would have to exit Florida,” McCarty said.

Other FHIAB members expressed concern that the MLR would reduce the number of companies and the amount of different policies available to consumers.

“As a member of the business community one thing we like is choice, and we are concerned with any disruption in the marketplace,” said FHIAB member Michael Jackson, who is also the executive vice president and CEO of the pharmaceutical company Bpharm, which employs five people.

There is already evidence the health-care law is pushing insurers out of Florida. McCarty stated earlier this week that most, if not all, insurers will stop issuing new policies to individual children, due largely to the law’s new provisions -- like no annual or lifetime caps on coverage -- that went into effect Thursday.

The health-care law will make the MLR of 80 percent mandatory by 2014, and FHIAB members suggested a ratio of 70 percent with a phase-in period to meet the higher number in the interim period. Florida law currently has a 65 percent medical-loss ratio.

McCarty is hopeful of approval of the waiver by HHS but is wary of the short time span imposed on the notoriously slow-moving federal government.

“The time line is very short, between now and the end of the year,” he said.

The possible exodus of some insurers from certain markets and the effect that will have on consumers is also behind the waiver request.

“We have to make sure consumers who have access to the marketplace continue to ...,” McCarty said.

Reach Gray Rohrer at grohrer@sunshinestatenews.com or at (850) 727-0859.