Crist's Search for a Private Market Solution

Hillary Clinton couldn't do it in Washington when she was First Lady. Neither could Arnold Schwarzenegger in California. Jeb Bush barely got to first base during his attempt in Florida. Yet, somehow Charlie Crist thinks he can climb the mountain of major health reform and make a significant dent in reducing the number of uninsureds in Florida. With the 2008 legislative session winding down, he is running out of time.

Crist wants private insurers to compete to offer limited-coverage policies for as low as $150 per month. Essentially, Crist's proposal would have the state accept bids from and negotiate with insurers on behalf of consumers. To reach this unbelievably cheap price, insurers would be exempt from the 51 state-mandated benefits that include coverage for everything from HIV care to mammograms. Instead, Crist would make sure that the insurers offer a "robust package of preventive, primary, and urgent-care benefits, including hospitalization."

There's another catch for Florida insurers: All of these policies would have to be guaranteed issue. In other words, insurers could not exclude anyone because of a pre-existing condition. Typically, insurers writing individual policies may turn away about one in four potential customers for having a condition such as diabetes, asthma, or even high blood pressure.

"The goal is to cover everyone," Crist said during an interview in February in which he unveiled his proposed Cover Florida Health Access Act plan. "There may be challenges, but our goal is to aim high."

Target Market Equals Profits?

With just days to go in the 2008 legislative session, Crist's plan still faces much uncertainty. Even if it doesn't pass this year, it likely will frame the debate for other legislative sessions. One reason is that the health insurance lobby — which has defeated many attempts at health reforms in Florida and on the national level — appeared to back Crist's proposal.

"We are supportive of anything that brings more flexibility to the market," said Bob Wychulis, CEO of the Florida Association of Health Plans, which represents more than 15 insurers. "The governor's plan appears to achieve what's intended."

While the 3.8 million uninsured Floridians would appear to be fertile ground on which health insurers would tread, insurers have done well with the status quo, thank you very much. Just look at their profits in Florida in 2008: Blue Cross and Blue Shield of Florida made $132 million; Aetna made $100 million; and UnitedHealthcare made $44 million. In addition, even smaller plans were lucrative. For instance, Av-Med reported a $56 million profit. With numbers like these, why would the health-care industry want major reforms at the state or national level?

The health-care insurers are not only happy with the limited-coverage idea but also with the governor's proposals to extend family policies to cover adult children to age 30, even if they are no longer dependents or are no longer in college. Currently, children are knocked off their parents' policies at age 25, or after they leave home. The 19-to-30 age group comprises the highest proportion of uninsureds. Extending coverage to this group would add a relatively healthy population to further spread the insurance risk. In theory, that would lower costs for everyone.

Michele Urso, an insurance agent in Spring Hill, and legislative chair of the Florida Association of Health Underwriters, said insurers already provide many low-cost products that typically have deductibles of $1,000 or more. However, those plans aren't available to people who may need them the most — those with chronic health conditions. Urso thinks many people will flock to the limited-benefit plans that Crist favors. "A lot of the uninsurable will take advantage of better pricing," she said.

There's a danger if too many high-risk patients take the plans. In fact, it could spell financial doom for them. To circumvent that, Crist and Urso suggest that the plans be structured to contain costs and allow insurers to change prices each year depending on their experiences.

When it comes to offering a new health policy, even Crist and the industry have their limits. Blocking this year's version of the governor's reform plan is Representative Aaron Bean, (R-Fernandina Beach), chair of the House Health Care Committee. Bean's own plan, Florida Health Choices, would neither require that insurers accept all comers nor would it require that insurers offer prevention or hospitalization. Crist's top officials have blasted the Bean plan, contending that it would not provide enough consumer protection and would allow unlicensed entities to sell insurance.

There is another major difference between the plans: Bean's plan allows companies to require workers to buy health insurance as a condition of employment. For many on both the national and the state scene, that proposal is not always well received. Crist's plan would neither require that insurers bid nor that uninsured citizens buy coverage.

The governor's office said several health insurers have indicated that they would bid for the business if Crist's plan is approved. UnitedHealthcare and Blue Cross Blue Shield are two companies that have openly said they support Crist's initiative.

Past as Future Predictor?

Florida has tried offering bare-bones policies before with its failed Health Flex pilot programs. Under that initiative, which started in 2003, entities could offer mandate-free plans in certain counties for people making less than 200 percent of the federal poverty level. In Jacksonville, Miami, West Palm Beach, and other major metro areas, the plans have failed to attract a major following. One contributing factor is that major insurers, who could use their major marketing muscles to sell the low-cost plans, did not offer them.

The other reason the plans failed to catch on is that customers had to be uninsured for six months before they were eligible to sign up — a provision that was included so HealthFlex would not compete with private health plans. Another detriment was the plans were generally sold to individuals instead of reaching out to the thousands of Florida employers who don't offer coverage. Urso thinks leaving the low-cost, limited-coverage plans in the hands of the experienced health insurers will bring better results. "We have high hopes," she said.

According to Urso, insurance agents hear stories of woe from individuals searching for affordable health care for themselves and their families on a daily basis. She has recently talked to clients who were turned down by insurers because of their diabetes or a history of a bad back.

Steve Israel, an insurance agent in Delray Beach, also has struggled to find policies for those with pre-existing illnesses. "People ask me all the time what type of coverage they can get for $100 a month," he said. Unfortunately, his answer to them is usually "nothing."

Israel is worried that Crist's proposed low-cost plans may offer a "false sense of security" to buyers. "People will get what they pay for," he said, noting that without a comprehensive policy, customers may not get the immediate and catastrophic coverage they need. Israel, also a spokesman for the FAHU, said the association supports the Crist initiative but that some members question its effectiveness. One concern is that low-cost policies could drain the less-risky customers out of group policies and force higher costs for group coverage. Another is that limited-coverage policies could motivate some employers to drop coverage altogether.

Paul Gionfriddo, a national expert on the uninsured and CEO of the West Palm Beach-based Quantum Foundation, adds that skimpy health insurance policies rarely attract many buyers. "Stripped-down plans that don't cover the things people need most often are of limited value to those with chronic health conditions and greater needs," he said.

Of course, none of these issues can adequately be answered unless the legislature steps up and approves a plan that also addresses state and federal mandates.

The Pros and Cons of Mandates

So what is at stake here? In April, Families USA issued a report estimating that six Floridians between the ages of 25 and 64 die each day because they do not have health insurance. The study was a take-off of a federal study that estimated that 22,000 Americans die each year because they lack health insurance.

These casualties of the American health industry are invisible to most policymakers and politicians. No one sees the middle-aged mom who is working two jobs skip her yearly mammogram, or a 55-year-old minority individual bypass a colonoscopy. A missed annual checkup or diagnostic screening test may seem innocuous at the time. The results, however, can mean premature death.

Insurers have blamed state mandates for the rising costs for years. Politicians — including Crist — have heard their pleas. Thus, the governor's main reform idea is to eliminate the mandates. But politicians also like to support constituents with a good cause. Helping people with autism is one of them. For instance, Crist supports a bill that requires all insurers to cover as much as $36,000 each year in treatment for autistic children. Here, we have Crist saying mandates are the reason that large numbers go uninsured while at the same time fighting for additional mandates

Even despite the seeming contradiction, Jeff Grady, executive director of the Florida Association of Insurance Agents calls Crist's plan a "wise proposal" because it would give consumers more choices. He was pleased that Crist's plan relies on the private sector rather than on more government involvement in health insurance.

Of course, health insurers have done little to reach out to the uninsured that desperately need coverage to prevent chronic health conditions from worsening. Instead, they've reached out to those with the least health risk to buy policies whereby the customer is responsible for more of the upfront costs

Grady is cautious to endorse the idea of allowing adult children to stay on parents' policies until age 30. But if insurers support it, agents will sell it

Becky Cherney, president of the Florida Health Care Coalition, a central and southern Florida employer health group, reacted to the governor's plan differently. "Everyone needs a good laugh once in a while," said Cherney. Although she feels that the governor deserves credit for trying, she is skeptical that the plan will make a big dent in the numbers of uninsured Floridians without state funding.

Still, give the governor credit for at least trying to help the uninsured. The issue has been off the front burner in Tallahassee since Jeb Bush tried to address it in 2003. At that time, the state was flush with cash. Nonetheless, politicians refused to allocate any state money to deal with the problem. Today, as the state budget is facing a billion dollar deficit, any significant new money for the uninsured is not even a consideration.

To compound matters, with the state and national economy tanking, more middle class Americans fear that they are only a pink slip away from losing their health insurance. Maybe that worry will translate into political action on an issue that has been too easy to sweep under the carpet for too long.