Health News Florida: Insurance Commissioner McCarty Slows on Reform Implementation, Turns Down $1 Million Federal Grant

FL official sends back $1M

By Jim Saunders
2/2/2011 © Health News Florida

Florida has a huge budget hole, and nobody truly knows whether the federal health-care overhaul will be upheld or killed by the Supreme Court.

But state Insurance Commissioner Kevin McCarty is taking his chances.

After a Pensacola judge’s ruling that the overhaul is unconstitutional, McCarty said Tuesday he will forfeit a $1 million federal grant that was supposed to go toward beefing up oversight of health-insurance rates.

McCarty also is looking at the court decision to decide whether to seek a federal waiver of a requirement that insurers spend minimum amounts of premiums on customers’ health-care expenses. The commissioner said last year he would seek such a waiver, which would give insurers more leeway in complying with the requirements, known as a "medical-loss ratio.”

As far as the Office of Insurance Regulation was concerned Tuesday, the federal health law wasn’t in effect. At least in part, that is because the state Capitol is in the same federal district as Senior U.S. District Judge Roger Vinson, who found the law unconstitutional Monday.

"As of right now, it doesn’t exist,” Deputy Insurance Commissioner Mary Beth Senkewicz said during a conference call of the McCarty-chaired Health Insurance Advisory Board.

McCarty’s disclosed the decision to give up the $1 million grant during the conference call and also sent a letter Tuesday to a top federal health official. The Office of Insurance Regulation was awarded the grant last year to hire workers and upgrade technology.

"No drawdown of any of the $1 million will occur,” said the letter, which gave no explanation.

McCarty gave a brief explanation for his decision, saying he was concerned about intrusiveness of the federal government. He also pointed to a Pensacola judge’s ruling. He did not give any indication whether Gov. Rick Scott influenced the move, though Scott said earlier in the day that the state will not spend much time or money carrying out the law until court challenges are resolved.

"Quite frankly, yesterday’s court decision just made the decision (to give back the money) that much easier,” McCarty said.

But Laura Goodhue, executive director of the consumer-advocacy group Florida CHAIN, said the grant was supposed to help policyholders by "shedding light" on how insurance premiums are set.

"Florida needs to prepare for health-care reform, and we should be accepting grants from the federal government that will help us cover our expenses,” said Senate Minority Leader Nan Rich, a Weston Democrat who is a top lawmaker on health issues.

McCarty is an appointed official who reports to Scott and the state’s all-Republican Cabinet. He served in the job under former Govs. Jeb Bush and Charlie Crist and is a national leader among insurance commissioners — but has faced recent speculation about whether he will keep the position after wholesale changes in the governor’s office and Cabinet seats during the November elections.

Tuesday’s decision was not the first time Florida has foregone federal funding that could help carry out the law. The state did not apply last year for money in what is known as the "Consumer Assistance Program" — which is designed to help people with insurance decisions and information.

Goodhue said that program could have provided $2 million to Florida, which was one of about 15 states that did not receive a grant.

It also is unclear whether the state Agency for Health Care Administration will apply for a newly available grant to prepare for creating a health-insurance exchange, which would provide a sort of marketplace where consumers could shop for coverage.

AHCA did not respond to repeated questions during the past two weeks from Health News Florida about whether it would apply for the exchange grant. Late Tuesday afternoon, AHCA referred all questions about the federal health law to the governor’s office, which did not return a phone call.

Scott brushed aside a question Tuesday about whether Florida would be ready to implement the law if legal challenges ultimately fail. Major parts of the law are scheduled to take effect in 2014.

"The state won’t be caught flat-footed,” he said. "We’ll be ready.”

But Rich said the state should not stop moving forward with the law.

"Until the Supreme Court overturns it or until the Congress changes it, we need to abide by what the law is,” she said.

In discussing his decision Tuesday to ditch the $1 million grant, McCarty pointed to a dispute in Connecticut that he said indicated the federal government would be too intrusive.

McCarty did not explain further. But federal health officials criticized Connecticut in October for approving a rate increase of as much as 47 percent for Anthem Blue Cross and Blue Shield — and tied the criticism to a $1 million grant that Connectictut received, according to a report in the Hartford Courant.

The federal government sent a letter saying Connecticut received the grant "based on its representation that it would rigorously review rates." But the letter said federal officials were surprised when Connecticut approved the rate increase without holding a public hearing or disclosing certain information about the hike.

–Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at jim.saunders@healthnewsflorida.org.

Kevin Wrege

Founder & President

Pulse Issues & Advocacy LLC

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Office: 202-625-1787

Mobile: 202-253-4929

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