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OIR Discusses Status of Federal Health Care Reform

OIR Discusses Status of Federal Health Care Reform

The Florida Office of Insurance Regulation recently summarized the status of implementation of federal health care reform at a meeting of the Florida Health Insurance Advisory Board.  Michelle Robleto, the OIR’s Deputy Commissioner overseeing life and health insurance, provided the update.

The OIR’s summary began with a recap of the new law, including the reforms effective September 23, 2010.  Changes include the new medical loss ratio (MLR) requirement and the rebates provided to policyholders.  Among the changes highlighted were the elimination of lifetime limits and restrictions on annual limits, first dollar coverage for preventative care, and the appeals process.  Additional reforms mentioned include the requirement to provide dependent coverage up to age 26, the elimination of pre-existing condition exclusions for those under 19 and the elimination of pre-authorization requirements for Ob/Gyn care.

Going forward, several additional elements of the new law remain to be implemented in 2014.  These include the establishment of health care exchanges, the potential expansion of Medicaid, and the individual mandate with employer penalties.

The Office of Insurance Regulation previously expressed concerns about the potentially disruptive effect of the medical loss ratio requirement on this state’s health insurance market.  However, the state was not able to obtain an exemption.  This has resulted in $123.6 million being refunded to covered persons, or an average of $168 per person.  The averages are $240 in the individual market, $190 in the small group market, and $94 in the large group market.  The OIR also summarized the rebates by insurer, with Golden Rule refunding the most in the individual market and both United Healthcare and Blue Cross Blue Shield paying significant refund amounts in the small group market.

The OIR next provided an overview of the health insurance exchange requirement, including the opportunity to decide whether to establish an exchange, enter into a partnership or rely on the federal fallback.  With the November 2012 deadline approaching for states to notify the federal government of their intent, Florida has determined that it will not be creating a state exchange.  The OIR’s presentation included a summary of the various states’ current positions on the exchanges.

The Office of Insurance Regulation also listed several concerns with the federal law.  First, some observers point out that the law does little to control health care costs.  At the same time, there will be significant increases in costs associated with expansions of the Medicaid program and with the increases in benefits.  The community rating aspects of the law in effect penalize the young, and the increased standardization suppresses innovation in the market.  Ultimately, this leads to fewer consumer choices.  Also, the future role of agents in the process is unclear as the mandates and standardization take over.

Finally the OIR identified states that might opt out of Medicaid expansion.  Florida Governor Rick Scott has said this state will not expand Medicaid.  Likewise, the OIR identified Louisiana, Texas, Mississippi, and South Carolina as states that might opt out.