Study: Consumer protections are lacking in Florida health plans
13 06 08 - 11:18
BY JOHN DORSCHNER
MaiamiHerald.com
Like most other states, Florida offers few basic protections for consumers purchasing health insurance, according to a national report released Thursday.
The report, sponsored by Families USA, a Washington consumer group, found that strong lobbying efforts by the insurance industry have left ``consumers with a patchwork of protections that are inadequate as a whole and that vary greatly from state to state.''
Assisted by such protections, the health maintenance organizations of all large health insurers in Florida are solidly profitable, earning $641.5 million last year, although their overall profit margin is a slender 3.9 percent, according to state data.
Humana spokesman Mitchell Lubitz said Florida law offers consumers plenty of protections. ``Consumers who purchase individual health insurance, such as from Humana, are guaranteed to be able to renew their coverage by that health insurer for the rest of their life. In addition, Florida health insurers can't raise the premiums for insured individuals based on their health.''
State data show Humana raked in the most money in Florida in 2007, with $136.7 million in profit for Humana HMOs and another $56 million from its CarePlus subsidiary. Aetna was second, with $100 million in profit, according to the Florida Office of Insurance Regulation.
''Very few states provide meaningful protection,'' said Ron Pollack, executive director of Families USA. ``Florida doesn't distinguish itself as any better than most states around the country. Too many are subject to abusive practices.''
One example: Insurers refusing to cover ''preexisting conditions,'' which can range from back pain and cancer to high blood pressure and chronic indigestion.
Florida, like most states, does not limit how long coverage can exclude a preexisting condition. That means a person could have a policy for five years and still not be covered for, say, back pain.
There is also no state law to limit the years that insurers can search for a preexisting condition (finding back pain from 20 years ago), and there is no state standard for defining what makes for a preexisting condition, according to the Families USA study. Massachusetts, by contrast, has requirements for all of these issues.
Melissa Rayman of Plantation certainly understands the limitations of buying insurance in the individual market. A part-time employee after the birth of her first child with a self-employed husband, she found the only policy they could afford required $100 a month extra for pregnancy coverage.
Even then she wouldn't qualify for maternity benefits until she paid the premiums for 15 months.
What's more, it appears the policy won't cover a Cesarean section. Since she had a C-section with her first child, there's a good chance she would need another the next time she has a baby. ''That's like a $10,000 expense that'll come out of our pockets,'' Rayman said.
''This makes me so angry,'' she said. ``And my mother's even in a worse situation. She has breast cancer, and her policy covered cancer only up to $100,000. Thankfully, she had major medical, which took care of the rest. But now she has a policy with $50,000 deductible. Can you imagine?''
Like 45 other states, Florida also has no requirement that insurers spend at least 75 percent of premiums on healthcare.
The state did score good marks in the survey for having an appeal process for consumers whose coverage was revoked and making an external review process binding on disputes.
Allan Baumgarten, a Minnesota health analyst who studies insurers' performance, said, ''My sense is that Florida is sort of comparable to other states, and maybe a little bit ahead,'' in its insurers' financial results.
One advantage Florida insurers have is that they have a considerably higher percent of Medicare HMO business, and the Bush administration has been compensating these HMOs at a much higher rate than did the Clinton administration, in an attempt to move seniors from government fee-for-service plans to managed-care plans managed by for-profit businesses.
''The Medicare business has been very prosperous,'' Baumgarten said.
The state data measures HMOs but does not include fee-for-service and other types of insurance business.
Insurers' revenue and profits increased slightly from 2006 to 2007, but the profit margin remained steady at 3.9 percent.
Meanwhile, enrollment slipped from 3.6 million members in 2006 to 3.4 million members in 2007. It's not clear whether the 200,000 who left HMOs moved to other types of insurance or became uninsured.
Pollack at Families USA pointed out that the healthcare proposals of Republican presidential candidate John McCain would emphasize the purchase of individual policies, assisted by tax credits, and would try to reduce prices by deregulating the state markets. McCain believes this is the most equitable way to reduce the number of uninsured Americans.
The Families USA researchers came to the opposite conclusion: If consumers are going to purchase coverage in the individual market, they need more protections and regulation, not less. ''Sen. McCain's ideas, I'm sorry to say, would make a bad situation worse,'' Pollack told The Miami Herald.
Pollack believes the suggestions of Sen. Barack Obama are much more workable.
Among other things, Obama would forbid insurers from rejecting people because of preexisting conditions, offer the uninsured a chance to get the insurance that federal employees have and require employers who don't offer coverage to contribute money to a pot to subsidize others' premiums.
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