Florida's four million residents lacking health insurance are getting new low-cost options this month under the state's Cover Florida Health Care Access Program.
But with Florida facing a $2 billion budget deficit, there's no money for any major marketing campaign. That means the state and insurance carriers are relying heavily on insurance agents to promote the new options.
While agents say they're glad the state is finally doing something to address the issue of the uninsured, many have doubts whether these new plans will catch on with consumers, particularly during this economic downturn when disposable income is so limited.
The plans also are a hard sell to the agents themselves. Commissions will be low because the premiums cost significantly less than traditional health plans. State officials say the policies generally cost about half as much as those previously available on the market. Additionally, agents may be cautious because the plans have significantly fewer benefits, and some people may buy a policy only to find out later it doesn't cover all their needs. The Legislature exempted these plans from the state's more than 50 mandated health benefits. As a result, the plans have more limited benefits than traditional policies and strict caps on the total amount of coverage.
"These limited benefit plans are a liability issue for insurance agents," said David Gentry, president of the Florida Association of Health Underwriters (FAHU) and chief operating officer and insurance agent at Fringe Benefit Plans, Inc. of Winter Park.
On Jan. 5, six health insurance carriers began participating in the program, offering 25 different plans. Two carriers — Blue Cross and Blue Shield of Florida (BCBSF) and United Healthcare — offer plans in all of the state's 67 counties. Four counties — Miami-Dade, Broward, Volusia, and Flagler — have additional options from other providers. Florida Health Care Plans is available in Flagler and Volusia counties; Medica Health Plan of Florida and Total Health Choice is offered in Broward and Miami-Dade counties. JMH Health Plan will also serve Miami-Dade. (Plan descriptions and other information are available at www.coverfloridahealthcare.com.)
The plans are available to state residents who have been uninsured at least six months or have recently lost coverage due to job loss. There are no income eligibility guidelines. Perhaps the most significant attribute of the Cover Florida plans is they are guaranteed issue. That means that for the first time in the individual insurance market, participating carriers will have to offer a policy to anyone who applies, regardless of health status. Traditionally, health insurers reject about 20 percent of applicants because they deem them too high a risk. (Although carriers do have the option of not covering a pre-existing condition — such as heart disease or asthma — for up to one year.)
The Governor's Plan
Cover Florida is Gov. Charlie Crist's effort to offer insurance plans with average monthly premiums of $150 a month. Fourteen of the 25 Cover Florida plans have monthly premiums with an average of $155 or less, with all of the preventive plans offering coverage for, on average, $155 or less. Four of the six carriers will sell policies to children as well as adults; the other two only sell to those age 19 and higher.
Costs of the Cover Florida plans vary depending on the applicant's age, gender, and choice of preventive coverage or catastrophic and hospital coverage. However, even those plans that provide hospitalization coverage have limited benefits. For example, the BCBSF statewide catastrophic plan will provide a $25,000-a-year maximum in benefits; the United Healthcare catastrophic plan will offer 10 days of hospital coverage a year.
The least expensive preventative plans are available to people under-40 — most of those will be well under $100 a month. But the catastrophic plans will generally cost more than $300 a month for insureds over 60. In addition, some of the catastrophic policies will have annual deductibles of $3,000.
While BCBSF has been selling some limited coverage policies for a few years, it remains a novelty with most carriers. "We've not actively marketed a limited coverage plan before," said David Lewis, United Healthcare CEO for central and north Florida. "We have not sensed a great market appeal for these products."
Nonetheless, United officials are hopeful the Cover Florida plans will enable previously uninsured residents to establish relationships with primary care doctors so they can take steps to avoid serious illness down the road. Lewis said the company will rely on its standard advertising and 8,000 insurance agents to market the plan. "We are committed to being part of the solution," he said when asked why United bid on the program.
Steve Israel, a Delray Beach insurance agent and spokesman for FAHU, said the new plans will mainly be attractive to people with chronic health conditions who have been turned down for coverage before. But he predicted that agents will face a challenge selling policies that lack hospital coverage. "We often find the consumer wants it all," he said. Even those plans with limited hospitalization will be a tough sell, he said, referring to the $25,000 maximum benefit on some plans. "The last time I looked, a bypass surgery cost more than $25,000."
However, even after customers have exhausted their benefits, they will only have to pay rates previously negotiated between the insurance carrier and the hospital or other health provider, said Randy Kammer, BCBSF vice president of regulatory affairs and public policy. Insurers typically obtain discounts exceeding 40 percent.
Kammer said the only way to get premiums low was by having deductibles and limiting coverage. The drug coverage under the plans will also be quite limited, particularly for pricey brand name pills. BCBSF will provide $15 coverage on drugs. That means it will provide up to that much coverage regardless of the price of the drug.
Comparison Shopping
Insurance Commissioners Kevin McCarty urged consumers to compare Cover Florida policies. Even individuals in the same family may want to choose different plans. "It is very important for customers to talk with their agent because one size does not fit all," he said. "It is important to partner with agents to make sure you get the best product at the best price."
Julian Lago, incoming president of FAHU and an agent with Plastridge Insurance in Palm Beach Gardens, said he's not thrilled at first glace at the Cover Florida offerings. "It's not knocking our socks off," he said.
While the guaranteed issue will be a big help to those with chronic health conditions, Lago worries the only people who buy the plans will be the sicker and older consumers. "We may end up in a death spiral and costs could be horrendous in future years," he said.
Michele Urso, legislative chair of FAHU and an agent in Tarpon Springs, said she is happy to have a product to offer to customers who previously got turned down because of medical conditions. But she said the costs for many of the policies will be beyond what many uninsureds will be willing to spend — particularly in the ailing economy.
"We are still looking at small numbers that will embrace this product," she said. "I initially thought perhaps 100,000 people would buy it, but I don't think it will be that many because of the economy."
Neither Crist nor state health and insurance officials nor the major carriers were willing to predict how many of the state's roughly four million uninsureds would sign up.
Urso said many agents offer policies even where they get no commission, such as FloridaKidcare. "But if an agent is just in it for the money, these plans will not be advantageous to the bottom line," she said.
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