In March 2010, Congress passed the Affordable Care Act (ACA)that promised to expand health insurance coverage to millions ofAmericans. Although the bill was characterized as "federal reform,"it is actually the states that are responsible for implementationand for ensuring compliance with federal law. To complete theseobjectives, the Florida Office of Insurance Regulation (Office)will have to commit substantial additional resources (personnel andIT) to meet the federal mandates, and to assist the FloridaLegislature to pass laws that comply with the new requirements.Therefore, overhauling state health insurance laws will be one ofthe primary legislative objectives of the Office during the 2011Legislative Session.
One may ask why the Office, a non-partisan government agency, ismaking the overhaul of the Florida insurance code on health careissues a legislative priority. Certainly health care reform is avery politically contentious issue; some legislators around thecountry have openly advocated a repeal of federal health care. Inaddition, there are genuine legal questions surrounding the ACA,specifically, the constitutionality of requiring people to purchasehealth insurance. However, the ACA is currently the "law of theland." As conscientious public servants, it is our responsibilityto present Florida's policymakers with the facts, which includelogistical needs and considerations required to implement thecurrent federal law.
To understand the scope of our effort, it is important to reviewthe chronological timeline for health insurance market changesunder the federal law. One of the immediate impacts of the ACA wasthe creation of the Pre-Existing Condition Insurance Plan (or "HighRisk Pool") by July 1, 2010. This health coverage is intended forpeople who have pre-existing health conditions, and who cannot findtraditional health insurance coverage because these conditions makethem "uninsurable."
Our state, under the leadership of Gov. Charlie Crist, did notbelieve the money allocated by the federal government would besufficient to run this plan effectively at the state level.Therefore, Florida was one of 23 states that "opted out" of thisplan, which means our state is deferring to the federal governmentto run this pool. However, this does not mean Floridians cannotutilize this coverage. In fact, the federal government beganaccepting applications from Floridians at www.healthcare.gov on July 1,2010.
Another important date for federal health care implementation wasSeptember 23, 2010. Some of the key reforms that were automaticallyimplemented on that date include: 1) no lifetime limits on healthinsurance benefits, 2) restricted annual limits on essential healthbenefits, 3) first-dollar coverage for certain preventativeservices, 4) strict limitations on rescissions, 5) dependentcoverage up to age 26 (current Florida law allows dependentcoverage up to age 25, with optional coverage up to age 30), and 6)the elimination of pre-existing conditions for children.Technically these benefits under the ACA are automatic upon renewalof a plan, but in practical terms, the Office has expendedresources to review form filings for small group, individual, largegroup, and out-of-state group carriers that comply with thelaw.
Major Changes for 2011 Perhaps one of the mostcontentious issues of health care implementation is the standardsin the law for Medical Loss Ratio (MLR). Federal legislators wantedto ensure that a specific portion of the premium dollar isdesignated for direct medical benefits and quality of careimprovement for consumers. The federal legislation establishesdifferent ratios for large group (85 percent) than for small groupand individual health coverage (80 percent). Althoughwell-intentioned, this static formula does not take into accountthe importance of health insurance agents, who will need to beincreasingly relied upon to help consumers navigate the growingcomplexity of health insurance.
The Office conducted a public hearing in Orlando last May, duringwhich we took testimony from agents, insurers, and consumeradvocates. Consequently, I wrote letters to both HHS SecretaryKathleen Sebelius and National Association of InsuranceCommissioners (NAIC) President Jane Cline expressing my concernsand advocating a delay in the implementation of these standards.Additionally, at the recent national meeting of insurancecommissioners, the Florida delegation helped build a coalition thatpassed a resolution expressing the NAIC's commitment to retainingthe role of health insurance agents in the process of selectinghealth insurance. Furthermore, the Office is collaborating with theNAIC leadership to send a letter to Secretary Sebelius advocating athree-year phase-in period for these standards. Finally, at thestate level, the Office intends to work with state policymakers,supporting legislation that sanctifies the importance of healthinsurance agents into the law. This could be achieved by exploringdifferent methods of defining agent commissions while complyingwith federal law, and the definition of MLR.
However, our major legislative effort in 2011 will be conforminglegislation for the immediate changes, and to expand the Office'sauthority to regulate rates for the large-group health andout-of-state group markets. Currently the rates charged by thesehealth insurers are not regulated in Florida. Above and beyond thecreation of new laws, the Office may need additional resources,including form analysts and actuaries, to implement these laws. Thelargest overhaul of the health insurance system will be in 2014with guaranteed issue and the elimination of pre-existingconditions, as well as the establishment of the health-careexchanges for the individual and small group markets. The exchangewould be a virtual marketplace to help insurers compete on a costefficiency basis while complying with consumer protections. Thegoal of the exchange is to facilitate the purchase of healthcoverage by supplying an effective marketplace.
Put simply: The expansion of health insurance to roughly 30 millionAmericans (and four million Floridians), will be incrediblyexpensive — and much of this expense will have to be borne by thestates. The largest cost increases will be due to the expansion ofthe Medicaid program. Expanding the regulatory authority andreporting requirements for the Office should also be an importantconsideration for the Florida Legislature. The federal governmentdid foresee some of these expenses and has agreed to pay for partof the Medicaid expansion. As for state insurance regulation, HHSawarded $1 million grants to states to enhance the rate reviewprocess. Florida applied for this grant, which was accepted; themoney will be used to add personnel and expand IT resources.
When President Barack Obama signed the final piece of theAffordable Care Act in March 2010 it may have marked the end of thelegislative process, but it only marked the beginning of theimplementation process. Since insurance is primarily regulated atthe state level, that means states are charged with theresponsibility of adopting new laws, finding new resources, andcontributing more money for the expansion of health insurance tomillions of Americans. While I have reservations about thelegislation, the Office does not intend to be in the middle of apartisan political debate. The Florida Office of InsuranceRegulation will act in the public interest by attempting toimplement the current law of the land. We will inform insurancecompanies of important deadlines and assist Florida's policymakerswith the information they need to understand federal lawrequirements, which will enable them to make educated decisions ashow to best implement these changes.