Health insurers want to raise rates in 2015, Florida’s regulatory agency is largely powerless to stop it, and the Republican Party of Florida wants you to believe it’s all the federal government’s fault.
By extension, the state GOP implies Democratic gubernatorial candidate Charlie Crist is worth some blame, too, since he’s come out in support of the law. During a Facebook Q&A on Aug. 6, someone asked Crist if he planned on reinstating the state insurance commissioner’s power to renegotiate 2015 rates in time to affect how much those rates cost.
"Absolutely," Crist replied. "The fact that we have a law on the books under Rick Scott that says the Office of Insurance Regulation can't regulate insurance is astounding. We deserve better, you deserve better."
But the state Republican Party was quick to contradict Crist, making the first comment on that response.
"Wrong, Charlie," the GOP’s Facebook account wrote. "It's Obamacare that prevents OIR (the Office of Insurance Regulation) from regulating insurance … a law that you think is great even though premiums will go up by double digits for Floridians."
So who’s right? Does Obamacare keep Florida’s insurance regulator from regulating insurance? We’re not going to make you fill out dozens of forms in triplicate to find out, because we’ve got you covered.
Regulating the regulators
PolitiFact Florida has looked at a version of this claim before, when Florida’s Democratic members of Congress complained in a letter to the U.S. Health and Human Services Department.
The letter -- dated Aug. 1, 2013, authored by U.S. Rep Ted Deutch and signed by all 10 of the state’s Democratic representatives -- asked the federal government to protect Florida consumers, because the state Legislature had prevented Insurance Commissioner Kevin McCarty from being able to "negotiate lower rates with companies or refuse rates that are too high." We rated the statement True.
What’s that all about? In May 2013, Scott signed Senate Bill 1842, a law that suspended for the next two years the requirement that insurers get state approval for rates for new plans. The bill took away McCarty’s power to negotiate rates or refuse rates deemed too high. Insurance companies still had to file rate changes with the state, but could institute those changes without approval.
The bill was in response to 2010’s Affordable Care Act, which said state law had to follow minimum federal guidelines for insurance plans. These guidelines included things like requiring that pre-existing conditions be covered, and protections against gender bias. The health care law also required insurance companies to justify unreasonable rate increases, defined as more than 10 percent year over year.
The Legislature decided that if the federal government wanted a say over policy premiums, then they could go ahead and regulate it themselves.
Republicans passed SB 1842 largely along party lines, with Scott writing, "I support the Legislature's deference to the federal government. ... Rates for the new plans will be reviewed by the same federal government that will be enforcing and updating new rules and regulations throughout this very fluid and uncertain transition period."
Unfortunately, the Affordable Care Act doesn’t give the federal government power to regulate insurance rates. It defers to states to regulate their premiums, following a set of criteria for state agencies. There are five states that don’t meet the standards of having effective rate review programs -- Alabama, Missouri, Oklahoma, Texas and Wyoming. Those states don’t empower commissioners to regulate premiums.
Ironically, the Republican Party of Florida told us it was referring directly to the portion of the Affordable Care Act that says state law is to be followed unless it contradicts the federal health care law, and that’s why Obamacare makes the insurance commissioner obsolete when it comes to setting rates.
Experts we talked to said that doesn’t mean Washington can or wants to do Florida’s job.
"If a state doesn’t have rate review authority, then no one really has the power to review them," Washington and Lee University law professor Timothy Jost, who supports the law, told us. "If Florida can’t do it, then no one can."
Jost said the federal government does have some power over insurers in Florida. It can ask insurance companies to explain those so-called unreasonable rates, then deny the companies the ability to sell in that state if the government chooses. The company would have to disclose to policyholders and potential customers it had been reviewed for unreasonable rates, an undesirable distinction. The ACA also has a provision requiring at least 80 percent or 85 percent of premiums on medical care, or pay rebates to customers.
But that’s not the same kind of power that a state has to regulate health insurance directly, he said.
Florida is unique in its unwillingness to let what the federal government considers an effective regulatory agency to do its own job, according to Greg Mellowe, director of health research and analysis at the Florida Center for Fiscal and Economic Policy, a consumer health advocacy group.
"The intent of Obamacare was to keep states in charge of regulating insurance," Mellowe said. "Instead, the Legislature changed state law to take away Florida’s rate review."
Washington even offers states grants to assist in strengthening rate review powers, a program in which Florida has refused to participate. We rated a statement from Sen. Bill Nelson about whether Scott gave the $1 million grant back and found it Mostly True.
For 2015, 14 insurance companies have filed plans for rate increases averaging 13.2 percent, although three companies said their rates would go down next year. While those are preliminary proposals and will in all likelihood change, the state has no power to negotiate to lower the premiums until next year, thanks to the 2013 law Republicans overwhelmingly supported.
The U.S. Health and Human Services Department points to states like New York and Oregon as examples of states that actively keep premiums low through rate reviews. Since 2010, other states have started or are planning to enact stronger insurance regulations to enforce Obamacare rules.
Both Louisiana and Montana have joined the effective rate review list in the last four years, and Iowa, Pennsylvania and Virginia have expanded regulatory powers over certain types of coverage. Californians this fall will vote on strengthening their elected insurance commissioner’s powers to regulate rates, with 70 percent of voters backing the initiative.
The Republican Party of Florida said Obamacare "prevents (Florida) from regulating insurance."
That’s not at all the case. The Affordable Care Act says if states can regulate premiums, they should. States only have to bring laws up to minimum Obamacare requirements. The federal government only intervenes in states that don’t have effective rate review programs -- something Florida can do on its own but won’t, thanks to the 2013 law passed by the Republican-led Legislature.
The state GOP not only misrepresented the terms of the Affordable Care Act, but it also implied the Democratic president’s signature law was to blame for the state’s (temporary) regulatory woes. It was mostly Republican lawmakers who spearheaded that change to Florida law, after the state rejected a $1 million federal grant to help improve the process. Most other states regulate insurance rates without the difficulty the Republican Party of Florida claimed.
We rate the statement Pants on Fire!
Facebook, Q&A with Charlie Crist, Aug. 6, 2014
Tampa Bay Business Journal, "Reform limbo: Florida rejects money for rate-hike review," April
New York Times, "Federal Auditors Will Soon Review Health Insurance Rates in 10 States," July 25, 2011
U.S. Department of Health and Human Services, "Health insurance rate hikes in nine states deemed excessive by HHS," March 22, 2012
National Association of Insurance Commissioners, Rate Review White Paper, June 27, 2012
Gov. Rick Scott, signing letter for S.B. 1842, May 31, 2013
Insurance Journal, "Florida Gov. Scott Signs Bill Limiting State Review of Health Insurance Rates," June 4, 2013
PolitiFact Florida, "Bill Nelson says Rick Scott returned a $1 million grant to strengthen reviews of insurance rates," June 11, 2013
PolitiFact Florida, "Democrats say Florida stripped insurance commissioner of power to set health plan rates," Aug. 8, 2013
Centers for Medicare and Medicaid Services, "State Effective Rate Review Programs," accessed Aug. 19, 2014
Sacramento Bee, "Field Poll: Strong support for California health insurance rate-regulation measure," Aug. 20, 2014
Interview with Kevin Cate, Charlie Crist spokesperson, Aug. 7, 2014
Interview with Susan Hepworth, Republican Party of Florida spokesperson, Aug. 8, 2014
Interview with Greg Mellowe, Florida Center for Fiscal and Economic Policy director of health research and analysis, Aug. 19, 2014
Interview with Timothy Jost, Washington and Lee University law professor, Aug. 19, 2014
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