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Insurance proposal sets up fierce fight

A plan to let the state regulate group health insurance policies sold by out-of-state companies is a hot issue.

By Associated Press
Published April 8, 2003

TALLAHASSEE - State lawmakers are often squeezed between conflicting claims, with each side advancing its cause through stories that exemplify the worst that can happen if legislation is passed or scuttled.

A bill scheduled to be heard Wednesday by the Senate Banking and Insurance Committee offers the latest example. It would give the state's Office of Insurance Regulation the power to regulate group health insurance policies sold by out-of-state companies.

Supporters say the out-of-state providers are inflating rates for policyholders when they become sick. But opponents say the bill would increase insurance rates for everyone and lead many insurance carriers based outside Florida to curtail their business in the state.

The measure (SB 2264) has Chief Financial Officer Tom Gallagher's strong backing but faces opposition from the Florida Insurance Council and the Council for Affordable Health Insurance.

Gallagher calls the situation a "death spiral" in which citizens buy policies at artificially low rates and then watch the rates soar when they become seriously ill.

About 175,000 Floridians, or 40 percent of the market for individual health insurance, hold policies from out-of-state companies.

Similar legislation passed the Senate but died in the House in each of the past two years. But supporters hope the House will be more receptive under Speaker Johnnie Byrd, R-Plant City.

Rep. Joe Negron, a Stuart Republican who is sponsoring the House version of the bill (HB 999), said the policies violate the principle of sharing risk among a broad group.

"As long as you're healthy and you don't actually need the insurance, your premiums stay artificially low, and then as soon as you're sick or you need surgery, insurance can go from $200 or $300 a month up to over $1,000," Negron said.

Gallagher said the practice is unfair to the regulated companies, which must insure unhealthy and healthy customers alike and cannot remain competitive with out-of-state companies.

But Sam Miller, vice president of the Florida Insurance Council, said many of the companies will stop doing business in the state if the bill passes.

"They are not bluffing," Miller said. "They will leave Florida."

Miller said the insurance council is trying to find a compromise that would eliminate abuses while allowing legitimate out-of-state companies to continue to operate in Florida.

If rates are lowered for those with major illnesses, Miller said, those who are healthy will see their rates increase.

"The issue is, how do you pool healthy and unhealthy people?" he asked.

Gallagher said the issue has generated many critics. Complaints against out-of-state companies increased by 483 percent from 1998 through 2001, compared with a 122 percent increase for overall accident and health insurance.

[Last modified April 8, 2003, 01:31:46]

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