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    Bid to rein in insurance costs unravels

    A Senate panel supports the state's chief financial officer, but a House panel sides with the insurance industry.

    By MICHAEL SANDLER, Times Staff Writer
    © St. Petersburg Times
    published April 22, 2003

    TALLAHASSEE -- While the Florida Senate and House have disagreed often this legislative session, they had seemed to support Tom Gallagher's vision for dealing with out-of-state health insurance companies that prey on the sick.

    But the camaraderie ended Monday when a House committee abandoned the recommendation of the state's chief financial officer and supported a less restrictive proposal favored by the insurance industry.

    House Bill 999, as altered by the Committee on Insurance, would continue to allow out-of-state group insurance companies some exemption from state regulation. Gallagher favors Senate Bill 2264, approved earlier in the day by the Committee on Health, Aging and Long-Term Care, and the original version of the House bill drafted by Rep. Joe Negron, R-Stuart.

    Gallagher was not pleased with an amendment proposed by Rep. John Stargel, R-Lakeland, and adopted by the committee.

    Gallagher is trying to eliminate what has come to be known as the "death spiral," which is created when insurance companies shop cheap policies to healthy individuals and then dramatically raise rates when policy holders need benefits. It has some Floridians paying as much as $3,700 a month for insurance, according to the Department of Insurance.

    One such person is John Crichton, a Sarasota man who recently filed a lawsuit in Illinois against Golden Rule Insurance Co. Crichton told the committee the company has raised his rates 300 percent since he took out his policy.

    "Various amendments would look like it is doing one thing, but in truth it would let the death spiral stay," Gallagher said. "We feel very strongly that any amendment that would allow people to be still stuck with the death spiral in this state is the wrong thing to do for these people."

    Stargel wants insurance companies to have 30 months before assigning policy holders to a pool of insured.

    Negron, along with Senate sponsor Jeff Atwater, R-North Palm Beach, agrees with Gallagher that they need to be assigned right away. Otherwise, healthy people can seek cheaper insurance as rates go up and that will leave a pool of sick people, prompting further increases.

    "I worked on this bill for a long time and it's supported by our treasurer," Negron told the committee. "This amendment hijacks and completely unravels what I've worked on."

    Stargel said too much regulation could backfire, that carriers will simply stop doing business in Florida. He said the intermediate step is a better approach for now, and then lawmakers can revisit the subject in the near future to see if it worked.

    He was supported by the Florida Insurance Council. Lobbyist Paul Sanford said Stargel's plan would address skyrocketing rates and still keep insurance plans available for small businesses that cannot get all employees to participate.

    "The question is, do you want to have this product available in Florida or not," Sanford said. "You need to vote against (Negron) and vote for Stargel's amendment, to keep this product available and not increase the number of uninsured."

    Negron and Stargel agreed the current bill is likely to change before the session ends May 2.

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