Donald E. L. Johnson, a former editor and publisher of Health Care Strategic Management and a former editor of Modern Healthcare, has been writing about health care business, insurance, stocks and politics s since 1976 and has been blogging at www.businessword.com since early 2003.
If you’ve been uninsured in Florida for more than six months, you may be able to buy a stripped down health insurance policy
for as little as $150 a month regardless of your health status and
pre-existing medical conditions. But there are gotchas that could cost
you thousands and even bankrupt you if you get sick.
The new legislation is primarily aimed at people who can afford
health insurance but have chosen to be self-insured so they can spend
their money on something besides health insurance. Nationally, some 14
million people who can afford to buy health insurance don’t. They
effectively self-insure themselves against financially catastrophic
risks. Many become bankrupt after they require financially catastrophic
health care and can’t pay their bills.
In Florida, insurers will be able to offer policies that cover a lot
of primary care and preventive care services, the maintenance services
that you should pay for out of pocket and should not be insured. But
those policies may have onerous caps on payments for expensive hospital
stays and illnesses, according to a report by the New York Times.
To buy real insurance that covers financially catastrophic illnesses, consumers will have to buy optional coverage.
In other words, the new law enacted by Florida has authorized
insurers to sell savings accounts where they are paid to hold
consumers’ dollars until they need primary and preventive care. But
insurers can sell policies that don’t provide the catastrophic coverage
almost everyone needs sooner or later.
The NY Times reports:
The low-cost plans have to include preventive services,
office visits, screenings, surgery, prescription drugs, durable medical
equipment and diabetes supplies.
Some options offered by insurers have to include catastrophic and
hospital coverage. But an insurance company could, for instance, choose
to limit the number of days of hospitalization it will cover or place a
dollar cap on reimbursing certain services.
That makes no sense. Florida politicians have got it backwards. They’re
requiring insurers to cover routine maintenance and not the kinds of
medical care that put people into bankruptcy.
Even so, Florida’s new health insurance law is a major advance,
because it eliminates many of the 52 expensive mandates for coverage of
services that make providers rich and health insurance unaffordable for
millions of Americans. Such mandates are a major reason health
insurance is unaffordable for so many workers and small businesses that
buy health insurance in the individual and small group markets rather
than through plans offered by employers.
In Florida, the elimination of such mandates is expected to reduce premiums for individuals by as much as 60%.
Some other problems with the new Florida law include provisions that
prohibit insurers from denying coverage based on health status and
pre-existing conditions or age.
That’s politically popular, but morally indefensible. What Florida
politicians have done is give people who have gamed the health
insurance markets by not buying health insurance while they were
healthy a reward for being irresponsible.
This means that there is no reason to buy health insurance in Florida
until you become sick. When you get sick, you can demand that an
insurer sell you a policy for a few hundred bucks a month and then
cover tens of thousands of dollars in claims. This assumes that you buy
the optional catastrophic coverage.
Insurers, therefore, will be required to give you coverage that
you’ve never paid for. This provision alone may cause insurers to avoid
the Florida market, nullifying the positives in the law. In fact, the
law may wind up making insurance less available rather than more
affordable in Florida. Alternatively, insurers will raise premiums on
all insureds to cover the cost of complying with the new law.
This will be unfair and expensive for consumers who’ve been paying
health insurance premiums for years and for those who buy health
insurance even though they are healthy and expect to remain healthy for
a long time.
What’s ironic, according to the NY Times story, is that health
insurance industry scholars aren’t convinced lower premiums will entice
the uninsured to buy health insurance. Historically, lower rates
haven’t reduced the number of uninsured by that much.
But you can bet that when the self-insured get sick, they’ll put up a
few hundred bucks to get coverage. The free riders who make health
insurance more expensive for the rest of us will be the winners.
Responsible people who buy health insurance to protect themselves and
society from catastrophic financial losses will be the losers.