Florida makes health insurance more affordable for uninsured, rewards free-riding self-insured

If you’ve been uninsured in Florida for more than six months, you may be able to buy a stripped down health insurance policy for as little as $150 a month regardless of your health status and pre-existing medical conditions. But there are gotchas that could cost you thousands and even bankrupt you if you get sick.

The new legislation is primarily aimed at people who can afford health insurance but have chosen to be self-insured so they can spend their money on something besides health insurance. Nationally, some 14 million people who can afford to buy health insurance don’t. They effectively self-insure themselves against financially catastrophic risks. Many become bankrupt after they require financially catastrophic health care and can’t pay their bills.

In Florida, insurers will be able to offer policies that cover a lot of primary care and preventive care services, the maintenance services that you should pay for out of pocket and should not be insured. But those policies may have onerous caps on payments for expensive hospital stays and illnesses, according to a report by the New York Times.

To buy real insurance that covers financially catastrophic illnesses, consumers will have to buy optional coverage.

In other words, the new law enacted by Florida has authorized insurers to sell savings accounts where they are paid to hold consumers’ dollars until they need primary and preventive care. But insurers can sell policies that don’t provide the catastrophic coverage almost everyone needs sooner or later.

The NY Times reports:

The low-cost plans have to include preventive services, office visits, screenings, surgery, prescription drugs, durable medical equipment and diabetes supplies.

Some options offered by insurers have to include catastrophic and hospital coverage. But an insurance company could, for instance, choose to limit the number of days of hospitalization it will cover or place a dollar cap on reimbursing certain services.

That makes no sense. Florida politicians have got it backwards. They’re requiring insurers to cover routine maintenance and not the kinds of medical care that put people into bankruptcy.

Even so, Florida’s new health insurance law is a major advance, because it eliminates many of the 52 expensive mandates for coverage of services that make providers rich and health insurance unaffordable for millions of Americans. Such mandates are a major reason health insurance is unaffordable for so many workers and small businesses that buy health insurance in the individual and small group markets rather than through plans offered by employers.

In Florida, the elimination of such mandates is expected to reduce premiums for individuals by as much as 60%.

Some other problems with the new Florida law include provisions that prohibit insurers from denying coverage based on health status and pre-existing conditions or age.

That’s politically popular, but morally indefensible. What Florida politicians have done is give people who have gamed the health insurance markets by not buying health insurance while they were healthy a reward for being irresponsible.

This means that there is no reason to buy health insurance in Florida until you become sick. When you get sick, you can demand that an insurer sell you a policy for a few hundred bucks a month and then cover tens of thousands of dollars in claims. This assumes that you buy the optional catastrophic coverage.

Insurers, therefore, will be required to give you coverage that you’ve never paid for. This provision alone may cause insurers to avoid the Florida market, nullifying the positives in the law. In fact, the law may wind up making insurance less available rather than more affordable in Florida. Alternatively, insurers will raise premiums on all insureds to cover the cost of complying with the new law.

This will be unfair and expensive for consumers who’ve been paying health insurance premiums for years and for those who buy health insurance even though they are healthy and expect to remain healthy for a long time.

What’s ironic, according to the NY Times story, is that health insurance industry scholars aren’t convinced lower premiums will entice the uninsured to buy health insurance. Historically, lower rates haven’t reduced the number of uninsured by that much.

But you can bet that when the self-insured get sick, they’ll put up a few hundred bucks to get coverage. The free riders who make health insurance more expensive for the rest of us will be the winners.  Responsible people who buy health insurance to protect themselves and society from catastrophic financial losses will be the losers.

 

 

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