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Costs up 11%; Cover FL gets rate hike

By Carol Gentry
2/18/2010 © Health News Florida

After verifying that medical costs in Florida are now 11 percent higher than last year, the state Office of Insurance Regulation has granted that level of rate increase to Blue Cross and Blue Shield’s Cover Florida program.

The insurer is the major player in the state-sponsored program for the uninsured, which began just over a year ago. The Blues accounted for about 3,400 of the 5,250 persons enrolled as of the most recent enrollment report, in January.

The rate increase for the company’s enrollees in Cover Florida will go into effect April 15, since it must give them a 45-day notice.

“Medical costs are increasing,” which is driving up health insurance premiums, said Randy Kammer, vice president of regulatory affairs and public policy for the Jacksonville-based insurer.  “Nobody talks about the increase in the cost of medical care.” 

The current 11-percent medical trend in Florida appears to be 2 percentage points above the national average, based on a recent consultant's report.

The Blues had requested a 30-percent rate increase effective March 1, saying the company was losing money on the program because those who enrolled tended to have higher-than-average use of medical care. As Health News Florida reported, OIR denied the request Jan. 5, saying the filing didn’t justify such a massive increase.

Cover Florida members tend to use more medical services than other Blues’ members, Kammer said.. Even with an 11-percent rate increase, she said, “we estimate this will be a loss.”

Nevertheless, the state’s largest insurer says it will hang in with Cover Florida, which offers stripped-down variations of basic and catastrophic health policies for all comers, including those who have been turned down for coverage. Gov. Charlie Crist touted the program as a fiscally responsible alternative to health reform, since it includes no state subsidies.

However, Cover Florida has not been a hit with the uninsured, who represent more than one in five Floridians – 24 percent of the non-Medicare population – and totaled 3.6 million in 2007-08, even before unemployment hit double digits. Using the conservative estimate of 3.6 million uninsured, Cover Florida has enrolled only one of every 685.

The rate increase was okayed after actuaries at OIR confirmed the Blues’ calculations that “medical trend” – the price of medical care this year compared to last year, without factoring in any insurance fees or other administrative costs – in Florida is 11 percent.

Jack McDermott, OIR communications director, confirmed that the 11 percent rate increase “is consistent with medical trend for other health insurers.” He said he doesn’t know how that compares with the national average.

A recent report by the consulting firm PriceWaterhouseCoopers said the national medical trend for 2010 is running about 9 percent. The past two years’ medical trends have been between 9 and 10 percent, the report shows.

--Carol Gentry, Editor, can be reached at 727-410-3266 or by e-mail.