Gov. Scott's Waiver Request Could Hurt Floridians Where It Counts, In The Wallet
Florida, thanks to Gov. Rick Scott, has had an on-again, off-again (though mostly off-again) relationship with the health care law. Since taking office in January, Scott has refused federal money that would help implement the health care law, halted plans to implement the law after a federal judge ruled part of the law unconstitutional, and refused to create a state health exchange.
Early in his administration, Scott "told reporters that he doesn't want the state to do anything to implement the law in the wake of the [Judge Vinson] ruling," meaning that the state would not ask for a waiver because that would be implementing the law. Yet in March, only after Judge Vinson stayed his ruling on the health care law and after Maine received the first waiver, did Florida apply for a waiver.
The MLR is a tool used to ensure that health insurance plans spend a significant percentage of premium dollars on providing health care and improving the quality of care, compared to what they spend on administrative, overhead, and marketing costs. At the beginning of this year, the MLR provision of the health care law went into effect and requires insurance companies to spend at least 80 to 85 percent of premiums on patient care. If insurance companies do not follow those regulations, they are required to provide rebates to their customers. States can apply for a waiver from this provision if they can show that meeting the 80 percent MLR "may destabilize the individual market" in that state.
In March, Citi analyst Carl McDonald examined Florida's MLR waiver situation and wrote, "Waivers in places like Maine set a good precedent, as it shows HHS is willing to be flexible...Florida is different, since there is actually some competition in the market..."
Unlike Maine, which really only has two insurers operating, Florida has a much more vibrant individual market, led by Blue Cross of Florida, UnitedHealth Group (through its Golden Rule subsidiary), Humana, Aetna, and Coventry. And while there will certainly be some disruption in Florida from the new minimum MLR requirements, it's also one of the largest sources of rebates to individuals in the country. Based on the 2009 data, it appears consumers would have received around $60 million in rebates had minimum MLRs been in place last year, and given how favorable utilization was in 2010, it seems likely the rebates would have been even bigger last year. [...]
In our view, Florida's minimum MLR waiver request is pretty weak, and we don't think it's likely that the waiver request will be granted, mainly because the state didn't present a real convincing argument that the individual market will be meaningfully disrupted. The six largest plans in Florida dominate the individual market, controlling more than 85% of premiums, and none of them has any intention of leaving the market because of the minimum MLR requirement. With most of the market stable, it's hard to see how giving away $60 million in premium rebates is a good thing for consumers. Put a little differently, if HHS grants this waiver to Florida, it's hard to come up with a situation where a waiver request wouldn't be granted.
So Scott is trying to have it both ways by complaining about not receiving a waiver for a law he's already willfully refused to implement. This time, like so many of his other proposals, Scott's political games are at the expense of Floridians.