Wednesday, June 11, 2008

Covering Florida (Part 2)

[Welcome Kaiser Network readers!]

In Part 1, we learned about new legislation that looks to help reduce the number of uninsured Floridians. Our guest blogger now looks at the potential downside, and offers some food for thought:

■ The bad

Along with the good provisions of this policy, there are also some challenges. There are challenges for those interested in purchasing the policies, the carriers offering the policies, and the State of Florida.

The biggest issue I see with this offering is the potential for under-insuring. Health care is very complicated and it takes some investment by the individual to become an informed consumer. There is potential for someone who chases the lowest premium to wind up in much the same position they would be in if they were uninsured. This also applies to those that don’t understand pre-existing exclusions, and pursue a course of treatment during their exclusionary period.

While many mandates are based on rare, elective or unproven treatments; others are based on inadequacies of current offerings. Things such as certain transplant benefits, cancer drugs and postnatal care. By removing all mandates, there is further potential for a subscriber to realize a catastrophic loss.

Questions remain as to what the offerings will look like to hit the $150 price point. Carriers that improperly estimate their actuarial exposure could take a loss that would affect their ability to offer competitive products to their other segments. Carriers could also realize a loss based on the fact that many first time insureds or those coming off a period of being uninsured tend to over utilize the first couple of years. This could start the product out with either a bad risk profile or a loss during those first years. There is also the risk associated with brand perception if the under-insuring item does become an issue.

The State of Florida has taken an aggressive action to address the health care concerns in today’s market. There is potential for significant political ramifications if they cannot deliver on this initiative. They have made many promises in this legislation that they will have to rely on outside partners to fulfill. They also walk the line of alienating brokers with the advent of the Florida Health Choices Corporation. The success or failure of this program has already become a point of discussion in the upcoming presidential election. There are many in the universal coverage camp with a vested interest in the failure of this initiative.

■ The unanswered

With any new program, there are always many questions. This initiative is no exception. The basic rules have been laid out, a framework has been envisioned, now we have to look to the market and see what types of offerings will be available. We must also look to the role of the brokerage community in marketing these plans. The final piece that has not been addressed is the medical providers.

Will there be multiple carriers allowed to offer plans within the guidelines ala Medicare Choice? Or will there be a bid process to control and manage the block like some of the state risk pools? It may also be possible to set up a separate subsidy program similar to the “three share” programs being proposed in Texas. Can the benefits hit the price point? Is that price point firm? What are the obligations of the carrier as far as assessing the risk offsets and renewals? Will there be a risk based scale or a COLA adjustment or a combination of the two? Can there be HSA options?

There are also questions from the broker community. Will the state actions push some producers out of the individual market and 2-50 market by establishing direct marketing entities and operating as the broker between proposed plans and the insured? What is the exact role of the Florida Health Choices Corporation? Can the agents help to market these plans and receive compensation?

The question that has only been touched on in the statistics is the medical community. There are provisions to enhance the role of community health providers in the outreach to the uninsured. This is to keep uninsured out of the ER and into community health clinics. The question that comes up is: If they are not paying currently and going to the ER, what is the driver that would encourage them to pay premiums and use the lower cost clinics?

The last question and one that I have yet to see addressed in any commentary or policy paper: Since Health Flex plans were a bust, has Florida learned from their previous mistake?

There is a lot to consider, but it is nice to see a market based solution being proposed. Now it is the market’s turn to see if they can rise to the challenge.

Thank You! We truly appreciate all the effort that went into these posts, and we'll keep our readers updated on how the program fares.
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