News & Updates


EDITORIAL: Crist’s hypocrisy

August 24, 2009 05:32:00 PM

At the Florida Republican Party’s quarterly meeting Saturday in Orlando, Gov. Charlie Crist, attempting to burnish his conservative credentials for the GOP Senate nomination, called President Obama’s proposed health care reform “cockamamie.” He added that “what’s going on in Washington is nuts.”


If only Crist would apply the same critical eye toward his own machinations with Florida’s property insurance industry. It’s a case study in how government can crowd out private businesses from the marketplace.

President Obama and several Democrats in Congress have promoted the idea of creating a “public option” health insurance plan that would “compete” with private insurers. The president has gone to great lengths to reassure Americans that if they were happy with their private insurance, they could keep it; they wouldn’t be forced to enroll in the government plan.

And that’s true as far as the plan’s statutory language would be written. But it ignores the economic consequences of having private companies attempting to compete against a government program that doesn’t have to worry about making profit to stay afloat. A public option could endure tight regulation and set artificially low rates to contain costs because it would be backed by the unlimited power of the federal government to keep pumping dollars into it, either via higher taxes, borrowing money or printing more greenbacks (or some combination of the three).

How long before for-profit private insurers discover they can’t compete with a taxpayer-subsidized competitor? The massive scope and power of a government program will dominate the marketplace and eventually squeeze out private insurance, leaving consumers with no choice but to seek shelter under the public plan.

The situation has already occurred here with Citizens Property Insurance Corp. The state created it to be the insurer of last resort for Floridians who otherwise couldn’t get private insurance. But it has become the largest property insurer in Florida (and the fourth-largest in the nation). Why? Because Crist has led the charge to cap Citizens’ rates to keep them affordable, while state regulators have refused to allow many private insurers to hike theirs.

The result has been an exodus of major insurers from the Florida market, forcing even more customers to enroll in Citizens. This state’s “public option” plan has become actuarially unsound — it has accumulated more exposure to potential property losses than it has assets. If a major hurricane hit, Citizens would be unable to pay its claims. The state would have to impose massive tax increases to meet its insurance liabilities.

Crist and the Republican-controlled Legislature this year finally acquiesced to the stark realities and lifted the three-year freeze on Citizens rates, approving a 10-percent hike. However, that’s still a fraction of what is needed to make Citizens actuarially sound. Meanwhile, the governor vetoed a bill that would have allowed private insurers to sell property policies with unregulated premiums, which was a modest attempt to lure them back to the Florida market.

It’s hypocritical of Crist to attack Washington’s insurance scheme when he’s followed a similar path in Tallahassee. Before he cleans up the mess in the nation’s capital, he should clean up the one he helped create here.