Bill Nelson says Rick Scott returned a $1 million grant to strengthen reviews of insurance rates

Sen. Bill Nelson did not have high hopes when he pressured Gov. Rick Scott to veto an insurance regulation bill that Nelson said could harm consumers.

Nelson, a Democrat who used to be the state’s insurance commissioner, asked Scott to veto SB 1842, which prevents state regulators from reviewing rate hikes for new plans in 2014 and 2015 as the federal health care law is implemented.

"Given the governor’s recent decision to return $1 million in federal funding that would have helped the state cover the cost of overseeing insurance rates under the new health care law, and the fact that he has not even applied for another $5 million in federal funding that is available to help states control their insurance markets, I’m not holding my breath," he wrote in an op-ed.

As Nelson predicted, Scott signed the bill.

"Rates for new plans will be reviewed by the same federal government that will be enforcing and updating the new rules and regulations throughout this very fluid and uncertain transition period," Scott wrote in a message.

In Nelson’s view, Scott and Republican legislators are setting up the federal government to take the fall for increased rates. His column left us wondering whether Scott really rejected $1 million for overseeing insurance rate hikes.

Scott didn’t want fed money

The task blasted us back to 2011, when the novice politician took office on a tea party-infused platform against Obamacare and big government. He and Republican leaders made a name for Florida by spurning million-dollar grants for the health care law despite having one of the highest uninsured populations and a $3.7 billion budget hole in 2011-12.

State leaders yearned for the law to be overturned or repealed, and their hopes heightened when a federal district judge in Pensacola ruled the law unconstitutional shortly after Scott took office. Scott explained to the New York Times in July 2011 that it did not make sense to "waste either federal money or state money on something that’s unconstitutional." 

We found news accounts saying Scott ordered state agencies to reject health care money. We could not turn up such a directive via public record requests, but we found lots of evidence of Scott talking about rejecting health care money.

Among the grants Florida rejected: $8.3 million for a community health center, $4.2 million for moving long-term care patients out of nursing homes, $2.8 million for prevention of teen pregnancy and STDs, $1 million for insurance exchange planning grants and, yes, $1 million for beefing up reviews of insurance premium increases.

"Things that are simply implementing the Affordable Health Care Act, or Obamacare, I’m not going to support because I believe this: It’s the biggest job killer in our state, we can’t afford it and it’s going to be bad for patients," Scott said in a 2011 AP story.

Scott elaborated on C-SPAN’s Washington Journal.

The grant

Now let’s get into the rate review grant, among the smaller grants the feds tried to award Florida to prepare for the health care law.

The health care law set aside $250 million over five years to help states beef up their scrutiny of rate hike requests. Under the law, any double-digit proposed rate increase by individual or small group market insurers must be closely examined "to make sure it is justified."

Florida intended to use its $1 million award to expand its rate review coverage to large group and out-of-state companies; create new premium filing requirements; hire more actuaries; and make it easier for consumers to search premium increase filings on the state insurance regulators’ website. (Read a summary of Florida’s application here.)

The state got the money in August 2010, when Florida’s governor was Charlie Crist. In an acceptance letter, Florida Insurance Commissioner Kevin McCarty wrote, "The Office looks forward to our collaboration with the Office of Consumer Information and Insurance Oversight as we move forward to use the grant funds to enhance the rate review process in Florida."

McCarty addressed the letter to Jay Angoff, director of the federal Office of Consumer Information and Insurance Oversight within the Department of Health and Human Services. McCarty made personal touches to the letter, crossing out the typed "Director Angoff" and writing "Jay." At the bottom, he scrawled, "Great to visit with you in Vermont!"

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McCarty’s next letter to Angoff on the subject on Feb. 1, 2011, lacked congeniality and an explanation. It came after the November 2010 elections that saw Crist out of office and Scott in, and after a Florida district judge ruled that the health care law was unconstitutional (the judge, Roger Vinson, said states should keep implementing the law because the matter would be settled by the U.S. Supreme Court).

McCarty’s letter contained two sentences: "The purpose of this letter is to inform you that after deliberate consideration, I hereby rescind acceptance of the above-referenced $1 million rate review grant, which occurred in a letter to you dated September 15, 2010. No drawdown of any of the $1 million will occur."

Angoff, who left his post at HHS in December 2012 to work for the D.C. law firm Mehri Skalet, told us the change of heart did not surprise him "once it became clear that many of the Republicans were just so maniacally opposed to cooperating with the Affordable Care Act."

Florida, Idaho and Oklahoma were the only states to return rate review grants, and four others did not apply.

What changed?

We were left with simple questions: Why did OIR return the money, and who ordered it?

Let’s start from the top -- of the rejection letter’s masthead.

McCarty’s office is overseen by the Financial Services Commission, a four-person body comprised of the governor and Cabinet. The 2010 election kicked out moderate-to-liberal members Crist and Chief Financial Officer Alex Sink and ushered in Scott and three anti-Obama Republicans. McCarty, who took over for Nelson as commissioner in 2003, is appointed by the commission.

Asked directly if Scott rejected the grant or told McCarty to return it, both the governor’s office and Office of Insurance Regulation sidestepped the question. Spokesmen initially sent a 2010 letter from then-House Speaker Dean Cannon to Crist regarding agencies implementing the federal health care law without "waiting for clear and comprehensive guidance from the Legislature."

Cannon’s greatest concern was the Office of Insurance Regulation. The federal government was "commandeering" the office, he wrote, which was was developing a system for enforcing new regulations. "Although OIR used routine budget mechanisms to commence these actions with federal grant money, the substantive actions must be subject to more thorough legislative scrutiny," he wrote.

Cannon told agencies to submit a detailed list of activities related to the health care law and not to take any more actions to implement the law after Nov. 15, 2010. He did not say OIR needed to return the grant.

OIR spokeswoman Amy Bogner sent us a vague statement that did not explain the reason: "The Office had the authority to draw down funds. The Office did not draw down the funds. The Office was not directed to take this action. We do not have any further comment."

We searched news clips. The grant did not generate much attention at the time, often lopped in with more expensive ones.

McCarty was quoted by the Tampa Bay Business Journal as saying part of the reason he rescinded acceptance of the grant was the federal government’s criticism of a Connecticut regulator approving a rate increase of as much as 47 percent.

"We hadn’t drawn down the money, we were concerned about its encroachment on state sovereignty, and yesterday’s decision just made it a cinch," McCarty said in the April 1, 2011 story, referring to the district judge’s ruling.

Former Scott spokesman Lane Wright told us for a 2011 fact-check that the governor’s staff examined each grant to determine whether it was intended to implement health care reform.

"Some grants were not applied for and some grants applied for under the Crist administration were returned because they were meant specifically for the implementation of Obamacare," Wright wrote.

Listed as an example: the premium review grant.

Our ruling

Nelson said Scott returned "$1 million in federal funding that would have helped the state cover the cost of overseeing insurance rates under the new health care law."

It is undeniable that a grant for that purpose in that amount was sought, and a grant was returned. But the official who technically returned the money was the state’s insurance commissioner, a political appointee who answers to Scott as part of his role on the Financial Services Commission. Still, he did so shortly after Scott took office and Scott’s office claimed some amount of credit back in 2011.

We rate the claim Mostly True.