TALLAHASSEE, Fla. -- Florida health insurers could be forced to 'put up or shut up' in the small group insurance market under terms of a bill adopted by lawmakers in the final hours of the 1991 legislative session.
Industry lobbyists admit they may have underestimated the potential impact of the pooled purchasing bill introduced by state Sen. Jeanne Malchon, D-St. Petersburg, as an amendment to a massive health care package, passed in the final hours.
The bill starts out by setting up a pooled purchasing cooperative that would include state government entities that purchase health care for clients and employees, local governments, counties, school boards, and special districts.
From the industry's viewpoint, the potential for trouble arises in provisions that allow the purchasing cooperative to expand its base to accept not only governmental service providers but also groups of private sector small or part-time employers.
Insurance industry lobbyists were surprised by the amendment. At the end of the session, they still were wondering what had happened.
Florida Insurance Council lobbyist Harry Landrum said in an interview he wouldn't object to the state's entry into the small group health insurance market so long as it was required to play by the same rules as the private insurance industry.
But, he said, 'I'd fight it to the death,' if the State of Florida is allowed to offer coverage insurers cannot, at prices that aren't actuarially sound.
Blue Cross and Blue Shield of Florida representative Steve Smith told National Underwriter the state pooled purchasing cooperative will face the same problems, including adverse selection and marketing costs, that currently are faced by private health insurers.
He questioned the state's apparent readiness to dive into an insurance market he said it had shown little interest in bolstering.
Health Insurance Association of America lobbyist Vince Rio said in an interview that the new law portends 'the unnecessary intrusion of a government pool into private health insurance.'
Under the reform package as it passed, the new health care cooperative is assigned the following duties:
* identifying insurers and provider networks serving the cooperative's members, and establishing criteria for evaluating their services.
* collecting data on the cost and utilization of health care services delivered to cooperative members.
* assessing the impact of existing or proposed mandated or 'mandated optional' health care benefits on cooperative members.
The health care cooperative also is authorized to deal directly with providers and insurers for the delivery of services to cooperative members, and to assist members in areas where no suitable provider network is available.
Small business group insurance reforms sought by Florida health insurers and business lobbyists were uncoupled from the health care train before final passage. Dead is a proposal to allow insurers to offer a basic hospital indemnity insurance plan, with an optional major medical rider.
Final health insurance rating language that passed the Florida Legislature closely tracks the National Association of Insurance Commissioners model for 1991.
However, a provision applying the new NAIC requirements to foreign carriers likely to affect rating and extension of benefits practices of some insurers.
Mr. Landrum said the new rating provisions may convince two unnamed insurers to withdraw from the already constricted Florida group health insurance market.
Mr. Smith said Blue Cross and Blue Shield of Florida will introduce a small group managed care product in Palm Beach County later this year. He said two 'price tags' will be attached to the plan.
One, he said, will show 'what could have been,' if lawmakers had reduced the number of mandated small group health coverages. The other will show the amount purchasers will actually be charged, minus the profit factor, he said.
