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Florida makes health insurance more affordable. Maybe.

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.

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15 replies »

  1. I just heard that the Gov signed this insurance bill today to start in Jan. Does anyone know what companies are involved as insurers? Does anyone know where I can get info on what kind of benefits this plan will have? I guess it will be better than nothing – like I have now.

  2. A stripped down health insurance policy would do nothing more than deepen the pockets of the health insurance companies. They would still get your health insurance premiums ($150.00 a month is nothing to sneeze at) and would have to pay out less (because the plan wouldn’t cover anything.) Not to mention the consumer would be out a bunch of money (not only are you paying monthly health insurance premiums, but when something catastrophic happens and your whittled down health plan won’t cover it, your out-of-pocket even more money.) I DON’T BUY IT! NEITHER SHOULD YOU!

  3. A stripped down health insurance policy would do nothing more than deepen the pockets of the health insurance companies. They would still get your health insurance premiums ($150.00 a month is nothing to sneeze at) and would have to pay out less (because the plan wouldn’t cover anything.) Not to mention the consumer would be out a bunch of money (not only are you paying monthly health insurance premiums, but when something catastrophic happens and your whittled down health plan won’t cover it, your out-of-pocket even more money.) I DON’T BUY IT! NEITHER SHOULD YOU!

  4. Cobra comments
    For those considering leaving their job and it’s benefits –
    Here is the most important thing to be aware of. If you are going to be responsible for paying for your own health insurance until age 65 when Medicare comes into play and picks up 80 % of any possible medical expenses then you want a PERMANENT PLAN A.S.A.P.
    Let me elaborate with an example. One of our clients took out a plan in 8/2001 at 248 per month. That plan now is at 667 per month. “So, why doesn’t he drop it for another?” Because while on that plan he had a change in his health condition and now the only other plan that he would qualify for is a Group health insurance plan. Which back in 2001 would have started at over 1000 per month.
    Cobra really only covers you for that “one big hit.” Then you leave it with a pre existing condition where you either don’t qualify for an individual plan, or in the case of Cobra, as long as you don’t wait 63 days from it’s expiration, where you would be out of the Individual health insurance market … you get to pay double premium.
    Cobra was designed only to avoid an immediate lapse in coverage when leaving a group plan. Not to be used any longer than necessary. Especially if you do not have another group plan waiting on you.
    Sincerely,
    Joe Jessome
    Smart Health Insurance Inc.
    http://www.SmartHealthIns.com
    800-828-2950
    Monday – Saturday until 8:00pm (est)

  5. The leading health care survey research company.the health care practice at the Institute for the Future in Men lo Park.For those gaming, the moral hazard will always be at play. I don’t see an answer. Regardless of what kinds of carrots and sticks you put out there, or whether you have a politically left or right solution, any catastrophic illness will make you a “ward of the state” once your savings are spent down.
    ——————-
    Ancil
    Florida Drug Treatment

  6. Mmmmm…I would bet Mr. Johnson who wrote this article does not live in Florida (like me). I bet he has not been denied the ability to buy health insurance for 8 yrs. (like me). I have applied to every company over the last years and here are the reasons I was rejected. I have hypothyroidism. (means I have to take a blue pill that costs $17 for 3 month supply every morning for life and have a blood test once a year). I have a touch of arthritis in my knee, which does not prevent me from working or doing anything else I want. I weight 16 lbs. more than their chart says I should. I hurt my back when I was 16, in a car wreck, but that has never stopped me from doing anything either, but it does show in my medical records that periodically from age 16 to age 60 I did ask for a muscle relaxer now and then. The rest of the reasons they would not insure me is because I had not had a mess of testing that is routine, like a mommogram or a colonoscopy, and a chest xray, because I could not afford it. I have been insured all my life, been self employed forever, have always paid for my own insurance, and when I came here in 2001, BCBS of Michigan said I could keep my policy, and BCBS of Florida said, “hey, that premium you are paying of $192 a month is now $900 a month!”. I had no option except to give up the policy if I wanted to keep a roof over my head. In the meantime, I have NOT neglected myself, and if I have not had testing of some sort it’s because physicians here REFUSE to see anyone unless they already have health insurance….so basically you have to have something or you are looking at a death sentence. My way of thinking is THANK GOD they are going to let up have SOMETHING….as it will be a far cry better than NOTHING!

  7. Tough one.
    In the individual market, as of today if you are not gaming the system, a good opportunity to get a meaningful policy is no small feat. Pre-existing conditions should not be an issue–you were always above board if affordability was your obstacle to access.
    For those gaming, the moral hazard will always be at play. I dont see an answer. Regardless of what kinds of carrots and sticks you put out there, or whether you have a politically left or right solution, any catastrophic illness will make you a “ward of the state” once your savings are spent down. Joe Q. public will inevitably pick up the tab. That is just a fact of life. I dont like it, but that is a fact of life.

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