Opponents of Obamacare were delivered fresh fodder when Florida Blue announced plans to raise 2015 exchange premiums by 17.6 percent. But instead of being a direct result of the Affordable Care Act, the Blue plan's increase may have been caused by one of several efforts by the state legislature to undermine the law.

In June 2013, Gov. Rick Scott signed SB 1842, a provision of which suspended the ability of the state insurance commissioner to regulate health insurance products, but only for 2014 and 2015. And only for new plans, not those grandfathered in. Since the federal government does not have the power to regulate rates, the state essentially made its health insurance exchange plans immune from premium oversight.

Florida Blue claims that the reason for the rate increase is an influx of older, less-healthy people signing up for exchange plans. But let's keep in mind that this is the last year that literally no one has the regulatory authority to veto premium increases in Florida. Starting next year, part of the duties of the insurance commissioner an elected post in Florida will once again be rate review. And since the penalties for going without health insurance will be higher, more people will base their votes on how fair the premium increase was. If you were Florida Blue and this was your last chance to raise rates with relative impunity, wouldn't you take it.

Of course, there could be repercussions if Florida Blue raises its rates on the exchange while competitors keep theirs low. Humana's PPO exchange plan in Florida is going up only 2.2 percent, on average, next year, and Molina is decreasing rates by 11.6 percent (Miami Herald). Can Florida Blue afford to lose members to competition.

Possibly. Florida Blue enrolled about a third of the more than 1 million people who signed up on the state's exchange, and has the luxury of being the only HIX plan for a majority of the counties mostly rural areas. If the insurer is raising rates an average of 18 percent, then the rural counties may be bearing the brunt, along with urban areas where the insurer already did well.

According to Decision Resources Group's Public Exchange Model, about 42 percent of Florida Blue's HIX enrollment is on the state's west coast, in the counties running from Tampa Bay to Cape Coral. The majority of Florida Blue's HIX enrollment comes from counties outside the state's top seven by population. The insurer may decide that it can afford to trim enrollment in these areas. Our estimates show Florida Blue performing less well in the populous South Florida region, where the insurer placed behind Preferred Medical Plan, Coventry, and Humana.

In Tampa's Hillsborough County, for example, only one Silver plan in 2013 came in cheaper than Florida Blue's least-expensive Silver plan, a very narrow network option from Humana. Florida Blue could raise its lowest Silver option there (BlueSelect Everyday Health 1443) and still come in with a plan lower than Silver offerings from everyone but Humana (Aetna/Coventry and Cigna).

Also keep in mind that it was only a week ago that the U.S. Department of Health & Human Services released figures showing that two Florida Blue subsidiaries, Blue Cross & Blue Shield of Florida and Health Options Inc., owed a combined $19.3 million in medical loss ratio rebates for 2013; these rebates were for small and large groups, not the individual market. The rebates kick in when less than 80 percent of premiums for individual and small groups (85 percent for large groups) are used for medical expenses.

Not only did Florida Blue's rebates make up nearly half of the state's total rebates of $41.7 million, but they were more than any other state's total. The state with the second-highest total refunds after Florida was Maryland, with $17.3 million in rebates $2 million less than the Florida Blue's alone. While the insurer's individual plan met the MLR criteria, Florida Blue's estimates for small and large groups were off significantly. It may be taking a similar increase rates now/pay rebates later philosophy to the individual market while it still can.

Florida Blue's rate increase makes business sense given the regulatory climate in a state that has been at the forefront of battling the Affordable Care Act. But you have to question the state leaders who made this environment possible.

Of all the states that have battled Obamacare implementation, Florida is perhaps the most quixotic. The state took away rate-review power of the insurance commissioner for only the first two years of the exchange's operation. The state fought against the MLR rebates in 2011, claiming that the individual market would wither; instead, Florida has the second-highest exchange enrollment in the nation. The state has refused Medicaid eligibility expansion, even as it was approved for statewide managed Medicaid expansion, effectively keeping hundreds of thousands out of managed care. Before becoming a senator, state representative Marco Rubio advocated and launched an exchange for health insurance, Florida Health Choices, but then the state refused to set up its own exchange through Obamacare. There are fewer and fewer opportunities for Florida officials to defend their resistance to the Affordable Care Act, so expect them to pounce on this news from Florida Blue.

Follow Mark Cherry on Twitter @MarkCherryDRG.

 

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