TALLAHASSEE, Fla.--The insurance industry, which five years ago led the charge to close Florida's high-risk health insurance pool, now is reviewing plans to reopen the insurer of last resort and broaden the tax base that supports it.
The about-face is attributable in part to a provision in the federal Health Insurance Portability and Accountability Act of 1996 which requires carriers and health maintenance organizations to guarantee issue individual health plans so long as the applicant is transferring from at least 18 months of previous coverage. The plans also must be guaranteed renewable under the legislation, which was sponsored by Sens. Nancy Kassebaum, R-Kan., and Edward Kennedy, D-Mass.
The insurance industry repeatedly has resisted the Florida legislature's efforts to require guaranteed issue for individual policies. There is, however, an exemption to the federal requirement for carriers writing in states with acceptable alternative mechanisms in place, such as high-risk pools.
The contradictions has not gone unnoticed by House Insurance Committee Chairman Rep. John Cosgrove, D-Miami, a long-time supporter of guaranteed issue for individual plans as well as advocate of the high-risk pool, dubbed the Florida Comprehensive Health Care Association.
'I certainly find it ironic because I know full well that they (industry representatives) are not social service counselors and that therefore there had to be a business motive behind their warm gesture,' Mr. Cosgrove told National Underwriter.
The high-risk pool and other topics were discussed at a recent meeting here between insurance industry representatives, Florida Department of Insurance officials, and legislative committee staff. The topic of discussion was the Kassebaum bill and what Florida needs to do, if anything, to comply with the new federal requirements.
'If there's some way to reopen the FCHA we probably want to do it,' said Florida Insurance Council Vice President Sam Miller. 'We believe there is tremendous value to the FCHA and that there is a role for it.'
FIC, which represents about 350 carriers in the state, is adamant that FCHA cannot be reopened until its funding base is broadened. The pool, which currently has about 1,500 insureds, is financed through insurer assessments, capped at no more than one percent of a carrier's Florida insurance premiums.
'You just can't leave the industry on the hook for it,' Mr.Miller said, adding that 'our support (to reopen the FCHA) has to be tied to (broadening the revenues base).'
Health Insurance Association of America General Counsel Ralph Scott said the health care costs of the so-called uninsurable, such as hemophiliacs, should be borne by more than just one industry.
Mr. Scott, who attended the meeting with state officials, said HIAA supports high-risk pools but only when they are properly funded. 'Somehow you have to pay for it,' he said in a telephone interview from his Washington, D.C. office. 'It's a societal problem and society should do something about it.'
One of the potential revenue sources FIC is bandying about is a tax levied against health care providers, although one source involved in the process conceded that passing such an assessment in a no-new-tax-state like Florida would be a tough to sell.
Mr.Cosgrove said the idea has 'merit' and that a broader revenue base is 'better public policy.'
'It would certainly make sense to me because the arguments would be `hey providers, you're the ones getting dollars out of this,' he said, adding that 'the politics would have to be addressed and worked out by the interested parties.'
Facing a $33 million net operating loss in 1990 and with projected operating losses in 1991 of between $48 million and $56 million, the FCHA was closed to new business effective July 1, 1991. Due to a more aggressive managed care approach and bulk purchasing discounts, the FCHA's deficit for calendar year 1995 was $9.8 million. The cost per insured, FCHA Executive Director Ryland Musick said, was about $9,000, of which $4,600 was covered by premiums and the remainder absorbed by the industry.
The numbers, he said, should be comparable for calendar year 1996. At its last meeting, the FCHA board of directors approved a motion requesting the legislature to explore the alternatives to providing health insurance access to all residents. Moreover, Mr.Musick said, the high-risk pool is willing to work with the insurance industry to that end.
'We're generally very hopeful because we feel that our mission is to provide coverage for the `uninsurable' uninsured and since we've been closed we haven't been able to do that,' Mr.Musick said.
Aside from getting out from underneath the requirements of the Kassebaum act, the industry also is eyeing the FCHA as a potential case manager for some high risk insureds who obtained coverage in the regular small group market as a result of insurance reforms passed in 1992 and 1993, which require carries to guarantee issue small groups plans, including a group of one.
'The issue is the same for the small group market or the FCHA...the issue is how do you best manage the cost of care for these folks,' Mr. Musick said.
