Feds reject Fla's request to waive healthcare overhaul law rules

Dec 15, 2011

Tallahassee, FL – As part of the federal healthcare overhaul law, health insurance companies are required to spend at least 80 cents of every premium dollar on direct patient care - if a company spends less, it's required to refund the money to beneficiaries. Florida wanted to phase in a lower rate, known as the medical loss ratio. But as Lynn Hatter reports, the federal government has turned down the state's request to bend the new rules.

The state tried to argue that health insurers would leave Florida if the federal government didn't waive the new rules. But Steven Larsen, with the federal Department of Health and Human Services, said the information provided by Florida did not substantiate those claims.

"We did go through the arguments presented by the department and they had identified companies that had withdrawn or said they would withdraw. We looked at those and saw that some of the ones that the department pointed to would not have been subject to the MLR law."

Larsen says the state already has a competitive insurance market and that it wouldn't be harmed by the requirement that 80-percent or more of premiums be spent on direct patient care. He says the agency received an "unprecedented" amount public comment in opposition to the state's request. The news was greeted with praise from Healthcare consumer groups like Florida CHAIN. Executive Director Laura Goodhue calls it a win for consumers that comes as the state continues to fight the federal healthcare overhaul law.

"The interesting thing about this is that the state has not done anything to implement this law. They've not authorized agencies to draw down much needed federal dollars, they haven't authorized the insurance office to start regulating all these new consumer protections, but they did take efforts and pains to try to exempt insurance agencies from provisions that only benefits policy holders."

Florida is the fifth state to get a rejection letter on its waiver request. Six states have had their waivers approved, and six more waiver applications are still pending.

State officials wouldn't comment, but issued a statement saying they are disappointed with the decision and still believe the rate requirements will destabilize Florida's health insurance market.