Blue Cross seeking rate increase on Cover Florida plans
By: Health Insurance
Submitted: 2010-02-05 12:17:41 | Word Count: 547
Cover Florida was designed to be what the state’s 3.8 million uninsured residents had been waiting for: an affordable, accessible alternative to expensive health insurance plans.
A year into the program, though, its leading insurer wants to raise premiums by 30 percent, citing figures showing a predicted 23 percent loss at the existing rates.
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“We’re losing quite a bit of money,” said Randy Kammer, vice president of regulatory affairs and public policy for Jacksonville-based Blue Cross and Blue Shield of Florida. “For every dollar that we take in, we lose almost a dollar and a quarter with the administrative and the health expenses with the products.”
The state’s Office of Insurance Regulation rejected Blue Cross’ request earlier this month, telling the company that it is still too early to approve any increases. Blue Cross representatives are now in talks with the regulatory agency in the hope of reaching an agreement, Kammer said.
Cover Florida debuted last year with more than two dozen plans with an average monthly premium of $155. The rates weren’t any lower than the bare-bones plans already on the market, but they had a huge leg-up on the competition: guaranteed issue.
In other words, the plans had to accept people regardless of their health history. In return, the carriers were given a pass on meeting the state’s more than 50 benefit mandates.
Gov. Charlie Crist, who supported the program from the start, continued to tout it throughout the year as a model for health care reform, even as reports showed that Floridians weren’t that interested in it. As of Nov. 30, the Cover Florida plans had attracted only 5,246 beneficiaries.
More than half of those are on Blue Cross’ rolls.
Like the other insurers that offer Cover Florida plans, Blue Cross gives consumers a choice between two plans: one that covers routine doctor visits and a few basic services and another, more expensive option that provides “catastrophic” coverage.
If the 30 percent rate increase is approved, the average monthly premium for the basic plan would jump $15, to $66. The catastrophic plan would go up $44, to $192.
The rate increase would ensure that Blue Cross nets a 5-cent profit for every dollar it collects in premiums.
Kammer said that rates need to be raised because, as many analysts predicted, the guaranteed plans are attracting people who likely would be turned down by other plans: the sick.
“What we’re finding is the people who are buying this are the people who are going to use it,” she said.
The Cover Florida experiment offers a cautionary tale for federal reform proposals, Kammer added. If Congress forces insurers to guarantee coverage without mandating that young, healthy people sign up as well, those plans, too, will bleed cash.
Blue Cross and United Healthcare are the only two insurers that offer statewide Cover Florida plans. United has no plans to seek a rate increase, spokesman Roger Rollman said.
